Oral Answers to Questions

DUCHY OF LANCASTER

The Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster was asked—

Third Sector

Madeleine Moon: What assessment he has made of the contribution of the third sector to the development of social policy; and if he will make a statement.
	St. Theodore's church—

Mr. Speaker: Order. The Minister must answer the hon. Lady's main question before she puts a supplementary question to him.

Edward Miliband: Through its 160,000 charities, 55,000 social enterprises and 20 million volunteers, the third sector makes an enormous contribution to our society. The Parliamentary Secretary to the Cabinet Office, my hon. Friend the Member for Corby (Phil Hope)—who is responsible for the third sector—will announce today that the Community Development Foundation is to run a new £130 million grass-roots grants programme to improve funding for the smallest organisations that are the lifeblood of our local communities, and I hope that it will be welcomed throughout the House.

Mr. Speaker: Now. St Theodore's church?

Madeleine Moon: Thank you, Mr. Speaker. I spoke too soon because I am so excited about the fact that, in my constituency, the Mothers' Union has just celebrated its 85th birthday in St Theodore's church. It has completed 85 years of championing social change and progress, helping young people to develop alternatives to temptations in the world of drugs and alcohol, offering parenting skills, teaching numeracy and literacy and, now, providing parental support for prisoners in my local prison. Does my right hon. Friend agree that organisations such as the Mothers' Union are essential to social change and progress in this country?

Edward Miliband: My hon. Friend is absolutely right. We all need diversions from temptation, and it is very important that the Mothers' Union is providing them. My hon. Friend also makes a serious point about the diversity of the activities in which third-sector organisations engage, helping people in innumerable different ways. We want to find ways of encouraging that. Governments do not create the dynamism that comes from organisations such as the Mothers' Union, but they can help, and that is the point of the small-grants programme that we have announced today.

Ann Winterton: I think that everyone will praise the contribution made by the voluntary sector in all parts of society in the United Kingdom, but there is an increasing problem in that the population is growing older, and younger and middle-aged people are not volunteering at all. How do the Government propose to surmount that difficulty?

Edward Miliband: I know that the hon. Lady takes a close interest in voluntary sector issues, and she is right to say that we need to do what we can to encourage young people to volunteer. That is the point of the arm's length organisation v, funded but not run by Government, which is creating new volunteering opportunities for young people all over the country. It has created 200,000 so far, and is on the way to creating a million.
	As the hon. Lady says, we need to encourage that culture of volunteering among both young people and middle-aged people, among whom I count myself. She will be pleased to learn that v is doing that, and I hope that it will be doing some work in her constituency.

Julie Morgan: Does my right hon. Friend agree that those in the voluntary sector have been pioneers in developing policy and helping the Government to do so? I think especially of the hospice movement. Is my right hon. Friend aware of the work of George Thomas hospice in my constituency, which of course is named after a former Speaker?

Edward Miliband: I too congratulate the hospice on its work in my hon. Friend's constituency. She has made an interesting point about the way in which the voluntary sector can add to the great work done by the public services—in this case, the national health service. There is always a need to ensure that it does not replace public spending, and the Government's approach is that it is not an excuse for them not to fund public services properly; but throughout the country, in many different ways, voluntary organisations add to the work that the public services do.

Greg Clark: The Minister is trying to hustle the Charity Commission into allowing the establishment of charities whose main activity is political campaigning. The Smith Institute, a registered charity, recently issued a publication that stated
	"Britain is a better country because of the choices that voters made in 1997, 2001 and 2005".
	[Hon. Members: "Hear, hear."] Labour Members make my point for me. Does the Minister think that political statements of that kind enhance or undermine public confidence in charities?

Edward Miliband: I have never been a hustler, and I am not about to start now. The question of individual charities is for the Charity Commission and not for me.
	Campaigning by voluntary sector organisations is a live issue between those on the Front Benches. Our position is clear: we believe that third-sector organisations should be able to campaign for changes in the law in support of their charitable objectives. They have told us that the guidance is unclear, which is why we are pleased that the Charity Commission is rewriting its guidance.
	I find it sad that the hon. Gentleman is, in a way, engaged in a personal crusade to return to the position taken by the Conservative party in the 1980s—one of hostility to campaigning by the voluntary sector. We want never to return to those days, and I hope that the hon. Gentleman will see reason.

Jamie Reed: I would like to hustle the Minister straight away. He mentioned the £130 million grass-roots grant. How can charitable organisations in my constituency, such as cricket and rugby clubs and the hospice movement, apply for that? To ensure that there is dynamism, will the application process be free of significant bureaucracy?

Edward Miliband: My hon. Friend raises a big challenge for Government, and it is important that we meet it. Let me briefly say something about the way the scheme will operate. The money will be distributed by the Community Development Foundation, not centrally to local organisations in his constituency, but to local partner organisations who know the circumstances on the ground. We hope that by the middle of next year, when those partners have been chosen, organisations such as those in my hon. Friend's constituency will be able to apply for the money. I hesitate to say this, but we will make good on this promise: there should be as light a touch as possible in the application process, because that approach is incredibly important for the smallest organisations in the country.

Cross-departmental Co-ordination

Peter Bone: How he measures the performance of his Department in co-ordinating the Government's programme across departments.

Gillian Merron: The Department's performance is measured in a number of ways, which include tracking progress against the Department's new public service agreements on adult exclusion and service transformation, the Department's strategic objectives and the programme of capability reviews across government.

Peter Bone: With the Government's programme in disarray, the Treasury staggering from crisis to crisis, the Home Office not fit for purpose and the Ministry of Defence not doing its job, if this were a football club would not the manager be getting the sack?

Hon. Members: It is Sven.

Gillian Merron: I am delighted to receive such an appropriate question from such an appropriate Member, but I am afraid that I cannot agree with his description of the Government. I can assure him and the whole House that we have stretching targets. We are not satisfied with where we are, but what I recognise are the statistics and results for people, such as on child poverty—600,000 have been lifted out of poverty—and the fact that millions of people are benefiting from new tax credits and benefits to support children, and that children are doing better in education than they have done for many a year. I assure the House that through Ministers and Departments working together and through the work of Cabinet and Cabinet Committees and the delivery unit, we have a robust system to check constantly our progress on how we are delivering. For the first time, this Government have brought in a rigorous process of capabilities reviews to check and address Departments' capacities to deliver. I hope the hon. Gentleman will support such moves.

Francis Maude: One of the Cabinet Office's key responsibilities across government is information security. In June, it received the Coleman review of Government information assurance, which stated in clear terms that
	"adequate mechanisms are not yet in place".
	Will the Minister tell us which Minister in the Cabinet Office read that report and what steps were taken in response to it?

Gillian Merron: That question was put to my right hon. Friend the Minister for the Cabinet Office and was answered yesterday, but let me reassure the House that trust in our systems is of course absolutely paramount. The report referred to was indeed a useful contribution to the national information assurance strategy, which was published on 27 June. I also assure the House that we constantly review our whole strategy. Technology moves on, and the Cabinet Secretary will conduct a review that will report shortly on data handling in Departments and agencies—and may I suggest that we could usefully turn to that?

Francis Maude: I think that we can take it from that answer that no Minister read that important report. Does not the fact that just months later half of the country's personal data were lost because of atrocious information security systems—in a department cobbled together by the Treasury when the Minister for the Cabinet Office was a key adviser in the Treasury—show a shocking lack of grip and competence, and should not the Minister for the Cabinet Office be spending less time writing manifestos for bottled elections and more time running the Department he is paid by the taxpayer to run?

Gillian Merron: I am sorry that the right hon. Gentleman feels that way. I have described to the House what is a robust and rigorous system. Of course, no Government could give the assurance that in every case everything will turn out right. If the right hon. Gentleman is suggesting that his Government could have done that, I would be interested to hear that. We should be looking forward. The Prime Minister has asked the Cabinet Secretary to conduct a thorough review across government and all the Departments and agencies that handle data. That report will be published shortly. Parliament will be well advised of it, and I think the right hon. Gentleman would be well advised to await the outcome of that review—to look forward rather than back.

Norman Baker: Should not the Cabinet Office be rather more effective and proactive across government in reducing the Government's overall carbon footprint? Is the Minister aware of last week's National Audit Office report, which showed that performance against Government targets for reducing carbon emissions is poor and that electricity consumption has rocketed? Is it not time that we had a little less greenwash from the Cabinet Office and a bit more effectiveness, so that it puts its own green house in order?

Gillian Merron: It might help if I were to remind the House that we are the first Government to publish a climate change Bill, and I hope that we will be given full support on that. It would also be useful if we were to remind ourselves that the Cabinet Office's role is to support Cabinet and Cabinet committees—that includes a range of issues—to co-ordinate emergency and crisis response, and to strengthen the civil service's capability. We are talking about the National Audit Office, so perhaps I could do no better than to quote its recent report about the Cabinet Office. The report said that in helping to meet targets on the Government's programme of priorities, the Cabinet Office has
	"an effective system for measuring other departments' progress in achieving their PSA targets."
	I am sure that the hon. Gentleman will be pleased to hear that.

Social Exclusion

Andrew Love: What recent discussions he has had with ministerial colleagues on Government policy on families at risk of social exclusion.

Edward Miliband: Following work with eight Departments, early in the new year we will publish the second part of the families at risk review. Its starting point is that investment in families, which has seen child poverty fall by 600,000, must be backed up by better services, including those for adults. So we will work with local authorities to ensure that whether it is in relation to health, housing or criminal justice, the needs and interests of the family as a whole are better recognised.

Andrew Love: As the Minister has mentioned, over the past 10 years we have taken 600,000 children out of poverty. However, we face major difficulties in delivering on our targets for 2010 and 2020. What more can my right hon. Friend do to ensure that we reach those targets in the time scales envisaged?

Edward Miliband: My hon. Friend rightly says that we have made important progress since 1997—taking 600,000 children out of relative poverty at a time when incomes are growing is an important achievement—but we have a lot further to go. We need to do three things. First, we need to continue to raise the incomes of people in poverty. Secondly, we must do more to encourage people in poverty to go into work—the announcements by my right hon. Friend the Secretary of State for Work and Pensions are designed to do that, including for single parents. Thirdly, we need to improve services. The children's plan, which was published yesterday, and the measures that we will take in January to help families at risk will all contribute to that. We have a strategy to carry on tackling child poverty and to build on the progress that we have made.

Bob Spink: The lack of decent social housing for vulnerable groups and families at risk of social exclusion is a particularly poignant problem at this time of year. What will the Minister do to ensure improved co-ordination between all Departments so that we can deliver better on that problem?

Edward Miliband: The hon. Gentleman is right to say that the issue of substandard housing is important. I believe I am right in saying that, since 1997, 1 million children have been taken out of substandard housing through the investment that we have made. I hope that he will support our plans to build 3 million homes over the coming years. I am afraid that some councils—obviously this is not a party political point—oppose those measures. I hope that he will join us in pledging to build 3 million homes over the coming years.

David Taylor: Many thousands of low-income families in this country do not have cars and live in isolated communities where there is poor public transport. They have some access to financial services through post offices, but they will no longer have that access in the months to come. Will the Minister have a word with his ministerial equivalent in the Department for Business, Enterprise and Regulatory Reform, particularly in respect of tightening up the framework on closures where the post office is the only shop in the village? Such closures will plunge thousands of families into social exclusion.

Edward Miliband: The consultation on local post offices is ongoing, and I know that we subsidise those offices to the tune of some £150 million a year. The other point that my hon. Friend makes is about the quality of bus services needed to get people to where they want to go. The Local Transport Bill is so important because it will improve bus services significantly outside London.

Gary Streeter: Are not some of the families most at risk from social exclusion those who have to deal daily with the Child Support Agency and Her Majesty's Revenue and Customs on tax credits? This is not a political point, but is there anything that the Minister can do to improve the bureaucratic performance, especially of HMRC, so that families that are already hard pressed financially do not also have to suffer the stress of grappling with that faceless bureaucracy week in, week out, which only adds to their many difficulties?

Edward Miliband: There is always more to be done to improve the performance of departments such as the CSA and HMRC in delivering a good service. All of us see that in our local surgeries. The CSA is being reformed, and tax credits have helped millions of families, but that is no excuse for bad administration. We need to do more to improve matters, and that is what is going to happen.

Youth Volunteering

Kevan Jones: What steps he is taking to increase opportunities for young people to volunteer for public service in their community.

Phil Hope: The Government will be investing £117 million in youth volunteering through the youth-led charitable organisation v from 2008-2011. That is the biggest ever investment in youth volunteering.
	In addition, we are supporting other youth volunteer programmes, including a £500,000 project for young adult volunteers to mentor young adult offenders and more than £400,000 for a project with local councils to engage young people in local volunteering activities.

Kevan Jones: I am grateful for that answer. Does my hon. Friend agree that one area in which young people can contribute is helping other young people? Will he join me in congratulating SHAID—Single Homeless Action in Derwentside—a group of young people in my constituency who give advice on homelessness to other young people? They provide a service that is not provided by any other agency locally.

Phil Hope: I am happy to join my hon. Friend in congratulating SHAID in his constituency. He is right: peer volunteering—young people helping other young people—is an important and constructive approach. I know that he plays a big role as a local champion of such projects in his constituency. The record investment is helping young people not only to help the community, but to help themselves. Those who volunteer get a huge amount out of the contribution that they make. Other MPs might follow my hon. Friend's example and take the opportunity of this time of year to send a message of thanks and congratulations to charities and third-sector organisations that will be working really hard to support some vulnerable people in our communities.

Peter Bottomley: In addition to the Government's volunteering initiatives, will the Minister encourage all his colleagues and all right hon. and hon. Members to recognise the role of the cadet units in the armed services and the emergency services? Will he encourage people to join youth organisations such as the Boys' Brigade, the Guides, the Woodcraft Folk and so on, and later become assistant leaders and instructors? Will he also encourage the Department for Children, Schools and Families to have positions of responsibility at all ages in schools so that pupils get used to organising themselves and others, and then go on to join the more normal volunteer organisations?

Phil Hope: I agree with everything that the hon. Gentleman has said. Many young people get a huge amount out of joining a variety of voluntary youth organisations, including uniformed organisations and many others. An opportunity to volunteer can often be a pathway: one starts by joining an organisation and then becoming a leader in it, gaining huge skills that help in education and perhaps in getting a job later. It looks good on the CV if someone has been part of such organisations. Many young people have increasing opportunities at school to undertake social enterprise activities that give them a chance to plan and deliver projects of their own that can help other people.

Bill Olner: How can the Minister ensure that all young people have the wonderful opportunity to volunteer to do good public service? How will he spread that message to schools and other institutions, and will he ensure that local authorities and public bodies do not put any hurdles in the way of young people who want to volunteer?

Phil Hope: I agree with my hon. Friend. My right hon. Friend the Minister for the Cabinet Office and I launched the national youth volunteering programme in November, with £75 million to be spent through v, the youth-led charity organisation to deliver volunteering opportunities through national youth organisations and youth action teams working in every local authority. I hope that every young person will have a variety of part-time, full-time and leisure time opportunities to give something back to the community and enjoy themselves in the process.

David Borrow: Lancashire police have been very successful in recruiting volunteers. Will my hon. Friend look at ways to enable them to increase the number of young volunteers who are working with the police to give a good service to the people of Lancashire?

Phil Hope: May I congratulate my hon. Friend on the work that he does to support young volunteers in his constituency? I was involved in the "Second Wave" project in London recently, where I saw first hand a number of black young people working with the police in their community. They talked and worked together to bring about a safer community both for young people and the wider community. There is a lot more that we could be doing to engage the police with young people in volunteering opportunities to create better communities for all of them to live in.

Youth Volunteering

Joan Walley: If he will make a statement on the progress of the national youth volunteering programme.

Shona McIsaac: What assessment he has made of the effectiveness of the national youth volunteering programme; and if he will make a statement.

Edward Miliband: The national youth volunteering programme is the main part of v's activities and involves funding 152 organisations to recruit volunteers up and down the country and in every local authority to form a team to promote volunteering to young people. Over the coming three years, that will help v progress towards its objective of 1 million new volunteers.

Joan Walley: May I welcome this truly record investment in the youth volunteering programme? Will the Minister tell me how many young people will benefit? Will he investigate how he can work with you, Mr. Speaker, to establish how we can lead on citizenship and volunteering? Will he visit my constituency to see how we can promote awareness of this wonderful programme?

Edward Miliband: I am certainly happy to visit my hon. Friend's constituency to see the work that is being done there. She makes an important point about the role of citizenship in our society. Recognising the voice and talents of young people is what the v scheme does. It is run by a dynamic group of young people called v20, who control much of the programme. It is a good example of the great things that young people can do in our country.

Shona McIsaac: Last Saturday night, I was invited to watch 150 young men take part in a football tournament organised by Sport Lincs with the aim of reducing antisocial behaviour. They want to encourage young people to become volunteer coaches so that the campaign can continue. What funding is available for such projects?

Edward Miliband: My hon. Friend mentions a worthwhile project. I know from my own area that midnight football can make a huge difference to young people by providing diversionary activities from antisocial behaviour. I hope that that is the sort of thing that v will fund and I encourage my hon. Friend to apply for such funding.

Volunteers

Paul Clark: What steps the Government are taking to increase training opportunities for volunteers.

Phil Hope: In the third sector review the Government committed to developing a sector skills strategy. As part of that, on 26 November my right hon. Friend the Secretary of State for Innovation, Universities and Skills announced that the train to gain skills programme will be extended to volunteers. That will allow thousands of people in the third sector, paid and unpaid, to gain the skills that they need to be able to contribute fully to a thriving third sector.

Paul Clark: I thank my hon. Friend for that response. He will know that volunteers and voluntary organisations the length and breadth of the country are important in building sustainable and stronger communities, no more so than two projects in my constituency: the Activity Loft on the Vineries estate and the Sunlight centre. Both are award-winning projects. What steps will he take to ensure that they get full access to such train to gain schemes, against the pressures of time and with as much ease as possible?

Phil Hope: I can give my hon. Friend some good news. The train to gain programme, which will now include skills funding for volunteers, will make a huge difference. The Sunlight Development Trust—one of more than 400 development trusts with more than 15,000 volunteers—will greatly benefit from those resources. My hon. Friend hosted a reception in the Commons where those trusts presented him and other MPs with awards. They described him as a committed and hard working constituency MP who was approachable, honest and truly committed to social justice and working with the most vulnerable. I could not agree with them more.
	I can only say that I agree with the organisation that said that
	"the third sector is in vibrant health...more Third Sector Organisations than ever...more Government funding than ever."
	That organisation was the Conservative social justice policy group.

Charity Bank in the North

Michael Clapham: What assessment he has made of the effect of the activities of the Charity Bank in the North on local third-sector organisations.

Edward Miliband: I was privileged to attend the launch last month of the Charity Bank in the North, which aims to make over £20 million available to the third sector in the Yorkshire and Humber region. I hope very much that that investment will help third-sector organisations to grow in new ways over the years ahead.

Michael Clapham: The voluntary sector is thriving in the coalfield communities. In particular, the Coal Industry Social Welfare Organisation offers a one-stop shop for people in mining villages and continuity for the recreation facilities provided in those villages. What advice does he have for CISWO and other voluntary sector organisations in the coalfield communities about accessing the finances of the Charity Bank?

Edward Miliband: I know very well from my constituency the good work that CISWO does. I would encourage it and other voluntary sector organisations to apply to the Charity Bank in the North for funding. I hope that that will help them to prosper in the years ahead and to improve the work that they do for communities throughout the coalfield areas.

PRIME MINISTER

The Prime Minister was asked—

Defence Export Services Organisation

Julian Lewis: Which Ministers he consulted before he took the decision to abolish the Defence Export Services Organisation.

Gordon Brown: First of all, I am sure that the whole House will wish to join me in sending our profound condolences to the family and friends of Sergeant Lee Johnson of 2nd Battalion the Yorkshire Regiment, who was killed in Afghanistan on Saturday. We owe him, and others who have lost their lives, a deep debt of gratitude.
	On changes in the defence exports organisation, I can tell the House that we have separated the awarding of export licences from the promotion of defence exports. The Secretaries of State for Business, Enterprise and Regulatory Reform, Defence, and Foreign Affairs were all consulted. As the Secretary of State for Business, Enterprise and Regulatory Reform announced yesterday, there will be a separate defence and security group within UK Trade and Investment. It will recruit seconded staff from the Ministry of Defence and it will be ready to expand its sales by drawing on UKTI's links with up to 100 countries.

Julian Lewis: I entirely endorse what the Prime Minister said about Sergeant Johnson.
	One name was missing from the Prime Minister's list of Ministers consulted—that of Lord Drayson. Is not it a fact that he was not consulted, and did not give his approval for this disastrous change? Is not that why that excellent ex-Minister now prefers to spend his time going round in circles on a motor racing track, rather than doing the same thing as a member of this hopelessly failing Government?

Gordon Brown: As everybody knows, Lord Drayson remains a member of our Business Council for Britain. He left the Government for personal reasons that I hope that everybody understands. As for the defence exports organisation, I think that the hon. Gentleman should agree that it is right to separate the awarding of export licences from the promotion of defence exports. It is also right that the defence exports organisation, which operated in only 19 countries, is now able to draw on the expertise of UKTI, which operates in 100 countries. Defence exports will benefit, as the head of British Aerospace acknowledged in a statement only yesterday.

Ann Clwyd: As a former member of the Quadripartite Committee on arms exports, and someone who campaigned for many years for reform of the DESO, I should like to congratulate the Prime Minister. He has done the right thing.

Gordon Brown: This market is worth £5 billion a year for Britain, and we account for 20 per cent. of world exports. However, it is right to separate the awarding of licences from the promotion of exports. That is what we have done. The defence exports organisation, which is now part of UKTI, will benefit from that and, over a period of time, the whole House will see the wisdom of the decision.

Engagements

Tim Loughton: If he will list his official engagements for Wednesday 12 December.

Gordon Brown: I held meetings with Ministers this morning. In addition to my duties in the House, I shall have further meetings with Ministers later today.

Tim Loughton: My constituents are battling against the closure of not 18 per cent. of sub-post office branches —the national average—but in some cases 50 per cent. across the constituency, despite a well above average pensioner population, and the fact that the remaining Crown branches are unable to cope with demand. At the same time, my councils face a £650,000 shortfall in the bus concessionary fares scheme, West Sussex county council again has the lowest grant increase, and we are still waiting to hear which hospitals will be downgraded. Will the Prime Minister meet a delegation of my local residents to explain to them what we are doing so wrong in West Sussex to be treated so unfairly?

Gordon Brown: That is the longest spending bid from the party that wants to cut public spending, rather than increase it. As for local post offices, I understand people's frustrations, but there is a recognised appeal system, which will involve Postwatch, and we have put in £1.7 billion to help post offices. Not a penny was put in by the Conservative Government.

Dari Taylor: The Prime Minister has paid tribute to Sergeant Lee Johnson. I add mine. Lee Johnson was a constituent of mine; he served bravely in the Army for 18 years. He was due to come home this Christmas but decided to stay to finish his command tour with his serving group. Will my right hon. Friend reassure the House that Lee Johnson's fiancée and his two children will be treated in the best way by the armed forces, and given all that a serving officer who died so bravely deserves?

Gordon Brown: I endorse what my hon. Friend said about both the bravery and the dedication of Lee Johnson. I also endorse what she says about our duties to the widows and families of those who have died. Sergeant Johnson was serving bravely in an exercise in Afghanistan that yielded great success for the expedition against the Taliban, and the whole House will want to pay tribute not just to him but to the dedication of all the servicemen and women involved.

David Cameron: I join the Prime Minister and the hon. Lady in paying tribute to Sergeant Lee Johnson, who was killed on Saturday in southern Afghanistan.
	May I turn to another part of the world where British soldiers are stationed? The deadline for discussions on the future status of Kosovo expired on Monday. What does the Prime Minister expect to happen next?

Gordon Brown: There will be a discussion this weekend at the European Council; this is a European responsibility. We believe that Kosovo should move to supervised independence. It has not been possible to get an agreement between the Kosovans and the Serbians. We believe that the European Union must make resources available to match the forces already in Kosovo, and we hope we can move to what we call supervised independence—in other words, the Kosovans will have their rights met, but in conditions where we do not have violence.

David Cameron: I am grateful for the Prime Minister's answer. Are not there three clear principles that we have to follow? First, Kosovo cannot be left in some sort of suspended constitutional limbo. Secondly, the resolution of Kosovo's final status cannot involve the reopening of borders anywhere else in the region. Thirdly, should we not use NATO reserve force to reinforce, as a precautionary measure, the troops who are in Bosnia? Will the Prime Minister follow those very clear principles?

Gordon Brown: I think it would be premature to put forces in at this stage. There are already forces in Kosovo. A statement was made to the House yesterday. It is the last area of the Balkans where we need to have arrangements in place that will ensure peace and stability in the future. I personally believe that the Serbians have an interest in working with the European Union, and we must persuade them to do so, but the important point is that we support the supervised independence of the Kosovan people. That will be reiterated by the European Council tomorrow. The message is going out loud and clear to Serbia and Russia that this is the course we wish to take, and I hope that there will be all-party support for the action we are taking.

Helen Southworth: Will my right hon. Friend find time in his schedule to look at the successes of Daresbury laboratory and the science and innovation campus there, where Government investment is being used to create world-leading science and put it into production?

Gordon Brown: I have talked to my hon. Friend and to a delegation from the north-west about the important work being done there. I know there was disappointment a few years when the synchrotron investment did not come its way, but I know, too, of the path-breaking research that is being done there. Over recent years, we have doubled the science budget, and the future of north-west science facilities is an important part of that. I will continue to work with my hon. Friend to secure the future of her area.

Vincent Cable: May I add my condolences to the family of Sergeant Johnson?
	When the Prime Minister tucks into his Brussels sprouts on his one day off at Christmas, which of the various disasters of the last six months will haunt him most: his indecision over the election, his inaction over Northern Rock, or the gross incompetence of the loss of 25 million people's personal data?

Gordon Brown: It is nice to have the hon. Gentleman here, and I thank him for his appearances over the last few weeks. Given the history of the Liberal party, it may not be long before he is back in that place again, representing his party. As for the issues of the last few months, we have made long-term decisions on energy, the environment, transport, infrastructure, planning, skills and the economy, and that is what governing is all about.

Vincent Cable: Given the Prime Minister's own position, he might not be wise to speculate about leadership elections. Is not the real disaster, for which he has personal responsibility, the continuing tragedy in Iraq? When he was in Basra this week, was he told that at least 40 women have been executed for personal immorality? Is that why 173 British troops have died—transferring power from the fascist regime of Saddam Hussein to the terror of the fascist militia who run the streets of Basra?

Gordon Brown: Iraq is now a democracy. Millions of people have voted. When I went to Basra, only two days ago, I found that there had been a 90 per cent. fall in violence over the last few months. We are now able to hand over Basra to provincial Iraqi control. So instead of the British forces having to engage in a combat role, we will, over time, be engaged in a training role, supporting the Iraqi forces. Over these last few months, 50,000 people have been trained as police and security forces. This is Iraqis taking control of their own security. I would have thought that, even with the differences over the war, the hon. Gentleman would have welcomed the progress that is being made.

Michael Meacher: Since Northern Rock has exposed widespread trading in worthless financial derivatives, gross exploitation of tax havens, opaque accountancy and gross exploitation of charity tax laws, will my right hon. Friend set up a committee of inquiry into the governance, accounting, auditing and transparency of the UK banking system?

Gordon Brown: We will investigate any specific issue that my right hon. Friend brings to our attention, but surely, for this House and for the people of this country, the most important thing is to protect the savers, depositors and mortgage holders of Northern Rock. Throughout, we have taken the right decision, so that savers, depositors and mortgage holders can be protected against the global financial turbulence that has affected them.

Michael Fabricant: A police officer in Linlithgow is now paid more than a police officer in Lichfield for doing exactly the same job. Is that fair? Is that right?

Gordon Brown: What is happening in Scotland is this: to pay the police more, the planned increase of 500 policemen has been suspended. I know what my constituents and the hon. Gentleman's constituents would prefer—that there were police on the streets. We have more police in this country on the streets, helping us, than at any time in our history. I more than anybody would like to be able to say to the police that we could pay their wages and their salary rise in full, but I have to say to them that no policeman and no person across the country would thank us if their pay rise was wiped out by inflation—and no party should know that better than the Opposition, given that there was 10 per cent. inflation in the 1990s. That is why the awards are being staged. Over the last 10 years, police pay has risen by 39 per cent., and by 9 per cent. in real terms. We have managed to combine that with having rises in police numbers and the biggest police force in history. That is the policy of the Government.

Madeleine Moon: Drug use and antisocial behaviour fell in my constituency with the development of Kenfig Pyle Community Youth, which offers young people opportunities to engage in arts, sports and other activities. Will my right hon. Friend agree to meet a delegation from KPCY to discuss how young people can engage further in cutting antisocial behaviour, drug use and drinking?

Gordon Brown: My hon. Friend is absolutely right. We have to be tough on antisocial behaviour and abusive drinking among young people, and at the same time, we must say to young people that if they want to get off the streets, we will provide youth facilities for them. Yesterday's children's plan was historic, because it was the first announcement of youth centres for every constituency in this country, with £160 million to be spent over the next three years. That is honouring our commitments to the teenagers of this country, in the same way as we have honoured our commitments to young children with Sure Start centres. I hope that there will be all-party support for this new investment.

David Cameron: In February, the present Foreign Secretary said:
	"I predict...in six months or a year's time, people will be saying, 'Wouldn't it be great to have that Blair back, because we can't stand that Gordon Brown'."
	Is the Prime Minister grateful to have such a far-sighted Foreign Secretary?

Gordon Brown: Once again, when the right hon. Gentleman has chances to ask questions about policy, he ducks them at every point. I will tell him what this Government are doing. Today's employment figures are the best in history, and unemployment is falling faster. The minimum wage is rising and there is more investment in the health service. That is what a Labour Government are about.

David Cameron: I will tell the Prime Minister what his policies have achieved: the first run on a bank in 140 years—and he has lost half the country's bank details and triggered a police investigation into his own party. That is what he has achieved.
	Let me try another question. Why does the Prime Minister think that Tony Blair has described his Cabinet as the B team?

Gordon Brown: Again, nothing about substance. The right hon. Gentleman said on television on Sunday that he was desperate to talk about education—but when he gets the chance, he talks about gossip. When it comes to rising to the challenges of this country, over the past few weeks we have made decisions on housing, education and health. That is what governing is about, not gimmicks.

David Cameron: But it is the substance that is going wrong for the Prime Minister. Look at the big decisions. We have small businesses up and down the country that want to know about capital gains tax, but he will not decide. We have tens of thousands of pensioners wanting decisions on their pensions, but he will not decide. We have the whole reputation of the country being wrecked because of Northern Rock, but he will not decide. We have a Prime Minister who cannot even decide whether he is going to go to Lisbon—is he going to sign the European treaty? Is it not clear that we now have an utterly dysfunctional Government?

Gordon Brown: Nothing to say about the big policy issues! On pensions, this Government have brought in the winter allowance, and that is why millions of pensioners are getting the winter allowance this Christmas. On the economy, we have the fastest growing economy in Europe, which is why today's employment figures are so good. On the health service, we have cut waiting lists as the Conservatives never did. That Government failed; this Government succeed.

David Cameron: The Prime Minister's Government are failing because they are dysfunctional. The Foreign Secretary gets his speeches rewritten after they have been briefed out. The security Minister is not allowed to speak about detention without trial. The Chancellor is so frozen out of decisions that he has become a national joke in the City of London. If the Prime Minister will not listen to his Cabinet, why should anyone else? For a decade he told us that if only he were in charge, we would have competence, trust and change. Instead, this year we have seen drift, dithering and incompetence. Is not 2007 the year that he got found out?

Gordon Brown: Pre-prepared phrases—and still, after two years as leader of the Conservative party, absolutely no substance.
	When it comes to the big issues, over 10 years we have maintained stability in the economy. Over 10 years, employment has risen and rising living standards have happened. Nearly 2 million home owners have been created over the past 10 years, and more people are in jobs than ever before. That is what governing is about. The right hon. Gentleman has gimmicks; we will continue to govern.

David Clelland: Does my right hon. Friend recall saying, in answer to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Mahmood) on 28 November:
	"We are trying to remove every barrier to young people getting the chance of both training and jobs."—[ Official Report, 28 November 2007; Vol. 468, c. 278.]?
	Does he agree that transport costs can represent such a barrier? Will he ask the Government office for the north-east to support the campaign by the North East Regional Youth Assembly to bring about concessionary travel for young people between the ages of 14 and 18, so that they can take full advantage of the education and training opportunities available to them?

Gordon Brown: We will certainly look at anything that removes the barriers to young people getting jobs. We have introduced changes that will make it possible after the age of 16 for young people without qualifications to make the transition to work. For those who are in work, where travel costs are high, we are already helping adults as a result of an announcement made two weeks ago, and I will look at what my hon. Friend says about young people. We will take action to remove any barrier to young people getting jobs.

Adrian Sanders: A number of my Torbay constituents are among the 125,000 people whose pension schemes collapsed between 1997 and 2005. They want to know when the long-awaited Young report on their plight is to be published.

Gordon Brown: As the hon. Gentleman knows, the Young report is considering how we can move to a 90 per cent. guarantee for the 125,000 people who have lost their pensions through no fault of their own. As he also knows, we have already provided £8 billion over a number of years to make good the provision of pensions. The Young report is now showing that there are more resources available, and I am confident that in the next few days we will be able to announce that there will be a 90 per cent. guarantee for all the 125,000 pensioners.

David Anderson: Will the Prime Minister make contact with the authorities in the United Arab Emirates to ask about the whereabouts of Alsadiq Abdullah, who disappeared on 23 September and has not been seen since?

Gordon Brown: I understand that the constituent to whom my hon. Friend refers is a British business man, but he has Sudanese nationality. It is a matter for the Sudanese to put pressure on that Government. I believe that that is happening, and we will support the Sudanese in anything they do.

David Amess: Has the Prime Minister been watching a television series that I, for one, found deeply offensive? It was called "The Blair Years". During one of those episodes, Mr. Blair claimed that it was his decision to give independence to the Governor of the Bank of England to set interest rates—a fact that surprised some of us. Will the Prime Minister tell the House, in the light of the present Government difficulties with the economy, who is responsible for the terrible shambles that the Government are in? Is it the Prime Minister, the Chancellor of the Exchequer or Mr. Blair—or is it all the fault of the Opposition, Mr. Bean or dear old Santa Claus?

Gordon Brown: I am happy to tell the hon. Gentleman that it was the Government who made the decision to make the Bank of England independent. I am afraid I have to remind him that that was opposed every inch of the way in the Lobby by the Conservative party. I hope that the Opposition have thought better of their ways, because that was the right decision for Britain.

Russell Brown: I warmly welcome the recent announcement on elderly care. However, will my right hon. Friend share with the House his views on councils who go out to market-test for services, ultimately leading to privatisation and cuts in services such as refuse collection and home care for the elderly, as is being proposed by the rainbow coalition of Dumfries and Galloway council, led by the Conservatives?

Gordon Brown: I understand that the Conservative- led council is cutting services in my hon. Friend's constituency. That is damaging to the local people. Value for money is the big test of whether services are provided in the best way for people, and from what I gather, the council in that area is not providing value for money for the local people.

Ann Winterton: Will the Prime Minister join me in congratulating our superb military on driving the Taliban out of Musa Qala after a fiercely fought operation? But does he realise that a great opportunity to win hearts and minds was lost because families and friends had to learn of details of that major and critical engagement from the media, with minimal input from the Ministry of Defence? Will he ensure that this regrettable omission does not recur in future, and that the MOD drives—

Mr. Speaker: Order.

Gordon Brown: It is for the Ministry of Defence, but particularly for the commanders on the ground, to decide what is right in the particular instance of an operation that is being carried out. I understand that a lot of the information was being provided by the Taliban, who were trying to make a propaganda gain out of what was happening. I am satisfied that our commanders on the ground were doing exactly the right things by our own people, and I am only sorry that families heard about it in a roundabout way rather than directly from the reports of success.

Helen Jones: The young people of Burtonwood in my constituency have no youth club. The youth bus comes only once a week and it is difficult for them to get into town because of poor public transport. What can the Prime Minister offer them for Christmas? Does he think that spending money on our young people is much better than offering tax breaks for dead millionaires?

Gordon Brown: The expansion of youth centres in our country will be a major feature of the next few years, and I believe that it is a very important contribution to the cohesion of our communities. I have to say that people who oppose the investment of £160 million in youth centres, oppose the education leaving age going up to 18, oppose the status being given to diplomas and then refuse to support education maintenance allowances are from a party that believes in opportunity for some. We believe in opportunity for all.

Angus Robertson: The police in Scotland are receiving a full pay rise, including back pay, from the— [Interruption.]

Mr. Speaker: Order. Let the hon. Gentleman speak.

Angus Robertson: I will enjoy saying this again. The police in Scotland are receiving a full pay rise, including back pay, from the Scottish National party Government. Will the Prime Minister take this opportunity to congratulate First Minister Salmond on that fair decision?

Gordon Brown: No. The SNP said in its manifesto:
	"we will set out plans in our first Budget for Scotland for 1000 more police".
	It did not honour its promises; there were only 500, not 1,000. The hon. Gentleman should be ashamed of his party.

Mark Hendrick: I understand that the Government have a policy of reducing carbon dioxide emissions by 60 per cent. by 2050, and of bringing in five-yearly carbon budgets and an independent committee to oversee the climate change programme in this country. Can my right hon. Friend tell me of any other country in the world that has taken such decisive action?

Gordon Brown: We are the first Government in the world to have a Climate Change Bill that will legally require us to cut carbon emissions over a long period of time. I am proud that this Government announced that measure in the Queen's Speech. We are also working with other countries at Bali to get an international agreement that will cut carbon emissions, lead to more renewables being used in the supply of energy and make for greater energy efficiency around the world. I appeal to all continents and all countries to join now a global agreement that will cut carbon emissions.

Malcolm Bruce: Will the Prime Minister acknowledge that while the Government rightly give tens of millions of pounds every year to support indigenous British languages such as Welsh and Gaelic, another British language—British sign language—gets no such support. Will the Prime Minister meet me, and a delegation of sign language users, to discuss how the Government can meet their needs, as they are currently failing to do?

Gordon Brown: I am grateful to the right hon. Gentleman for raising that issue, and I will be very happy to meet him. It is a very important issue, and we will see what we can do together.

Phil Wilson: Next year, a national centre for plastic electronics will open in my constituency with the help of Government investment. The technology will help lead the next generation of computers, and by 2015 it will be a £16 billion industry. Does my right hon. Friend agree that the Government's belief in the talents of our people will ensure that we will not return to the dark days of the Tories, when there was 40 per cent. unemployment in my constituency?

Gordon Brown: I applaud my hon. Friend for fighting for jobs for his constituency. Science investment will treble over a 15-year period, and that will mean that there will be more jobs in science in all the constituencies of the country. He will be pleased to note today that the employment figures say that employment in Britain is now at 29.4 million—the highest ever recorded in our history, and the result of the fact that we have a Labour Government.

Paul Rowen: Is the Prime Minister aware that pensioners will be able to collect their pensions from post offices only on Christmas eve, because the Department for Work and Pensions will not transfer the money? Does he not believe that that will inconvenience many pensioners, and is another nail in the coffin for post offices?

Gordon Brown: I have looked into this matter and I think that the hon. Gentleman is wrong. Large numbers of pensioners will have their pension advanced to Friday, when it will be paid, as a result of representations already made, and the Post Office has assured us that the remaining number—those who get weekly pensions—will get their pensions on Monday and there will be sufficient facilities available for that pension to be paid to them on Monday. I hope that that clears up any misunderstanding. Pensions will be paid to millions of people on Friday as well as on Monday.

Barbara Keeley: Elderly and disabled people and their carers in my constituency want flexible care arrangements that can give them the maximum possible dignity, and they will welcome the social care reforms announced this week. Can my right hon. Friend assure me that those reforms will continue so that those who depend on social care can have the best possible quality of life?

Gordon Brown: I applaud the work that my hon. Friend does in promoting the interests of carers and social services generally. The social budgets that are being increased will give people far more freedom to spend money in a way suitable to their needs. That is what making the big decisions about the future is all about. We will invest in social services for the future; the Conservatives will cut the budgets. They are about style, and we are about substance.

Afghanistan

Gordon Brown: With the support of the whole House, I start by paying tribute to our armed forces in Afghanistan and elsewhere. They are doing vital work, giving so much every day in dangerous places in the service of our country. Let me particularly pay tribute to the 86 British servicemen and women who have lost their lives in Afghanistan, 42 of them this year alone. I know that the whole House will join me in honouring the memory of the fallen and saluting the courage of all our military and civilian personnel.
	Let me, on the morning of the capture of Musa Qala, praise the professionalism and resolve of our forces in recent days. They have helped to defeat the insurgents and in a vital district of Afghanistan they have restored peace. Let me make it clear at the outset that as part of a coalition we are winning the battle against the Taliban insurgency. We are isolating and eliminating the leadership of the Taliban; we are not negotiating with them. For six years, 38 countries have come together with the people and Government of Afghanistan to rebuild this failed state, to prevent the return of the Taliban, and to root out al-Qaeda. I can tell the House that Britain will continue to meet our obligations and honour our commitments, discharging our duties on this task and to the people of Afghanistan.
	Having been reviewing our strategy since July, I now want to announce the next stage. It is a long-term and comprehensive framework for security, political, social and economic development in support of Afghanistan. This long-term comprehensive framework entails, first, more Afghan ownership, with the Afghan army, police and Government building on NATO military achievements and taking over more responsibility for their own security. Secondly, we support localisation and then reconciliation, with Afghans building on the creation of a democratic constitution by developing and strengthening their institutions not just at national but at provincial and local level as we support that search for political reconciliation. The third aspect is reconstruction. In what is still one of the poorest countries on earth, where only one in three has clean drinking water, life expectancy is just 43, and 80 per cent. of women cannot yet read, we will help to ensure, through reconstruction and development, that more Afghan people have an economic stake in their future. Fourth, to underpin this, we will help to ensure greater burden sharing by all partners and allies, with each of us playing our part—as hard-headed realists, not idealists—in the long haul to help the Afghans themselves to govern and secure their own land, and together therefore shifting our emphasis from short-term stabilisation to long-term development.
	The foundation, now and in the future, for our comprehensive framework is military support for the Afghan Government against the Taliban-led insurgency, also denying al-Qaeda a base from which to launch attacks on the world. Throughout last winter, Taliban propagandists repeatedly promised a "spring offensive". Instead, it is the British and other NATO forces, together with the Afghan army, who have taken the initiative. We have been driving the insurgents and extremists out of their hiding places, preventing them from regrouping and attacking the areas around the provincial capitals where stability is taking hold.
	It is this military success that has preserved Afghanistan's emerging democracy: a constitution, fragile but still intact; a free media; and a changing society where, unlike six years ago when women were banned from education, from work, and from virtually all of public life, there is now a higher proportion of women MPs in Afghanistan than in many western countries, and 5 million children are at school, 2 million of them girls once denied education.
	We need to hold and to reinforce what we have achieved together, so Britain will maintain a strong military force in Afghanistan of around today's figure of 7,800. That is a contribution second in size only to America's. We will increase our support for our forces: I can announce today, fully funded from the reserve, 150 new protected patrol vehicles specially procured for Afghanistan, bringing to 400 the total of new protected vehicles bought in the last 18 months for Iraq and Afghanistan. We will combine that with increasing numbers of Sea King helicopters in Afghanistan, and through NATO, new contracts will be negotiated for leasing commercial helicopters to move routine freight, freeing up military helicopters for military tasks.
	However, because we know that military success is only one part of the framework—a necessary but not sufficient condition for progress in Afghanistan—we will train Afghan forces to take ownership of their own security. Next year, we will aim for 70,000 trained Afghan soldiers, 20,000 more than now, supported by a rising number of British trainers and mentors—340 of them—that will be part of an overall NATO training force of over 6,000. Already, the Afghan army is proving itself in Musa Qala.
	But the challenge of supporting an Afghan lead on security goes wider than the armed forces; it includes the police, courts and prisons. Here we are dealing with decades of failure and corruption, and progress has been slow, but by March 2008 there will be over 800 international police trainers, including 65 police from Britain. That must be matched with a wider effort across civic society, which we will continue to support, for judges, courts and prisons—working with the grain of Afghan traditions but within international norms. One way forward is to increase our support for community defence initiatives, where local volunteers are recruited to defend homes and families, modelled on traditional Afghan "arbakai".
	To ensure that longer-term political and economic objectives are the guiding force behind the security campaign, we have brought the British civilian and military personnel together into a colocated headquarters. We will continue to strengthen their integration, and at the same time we will recruit and deploy more specialists who speak the local languages and understand tribal dynamics. But again, the Afghans themselves must be persuaded to take the lead in improving local and national government, and on my recent visit I saw the scale of the challenge, but also the opportunity, and the importance of our support.
	I can announce today that from our Afghanistan aid programme, which has already spent £490 million in six years, Britain will fund two additional programmes for local government: first, to help the Afghans create stronger provincial and local governance, including building the capacity of the directorate of local governance and supporting civil society groups to hold local government to account; and, secondly, to provide more support for the national solidarity programme, which builds the capacity of local communities to run their own development projects.
	As a measure of the importance we attach to stability in building local capacity, we will immediately move infrastructure projects forward in Musa Qala, which we have recaptured, and upon which we now wish to build, on firmer foundations. That process will include a work programme for up to 10,000 people, and plans to rebuild and refurbish the district centre, and to rebuild the main high school and four mosques in the area.
	Our objective is to defeat the insurgency by isolating and eliminating its leadership. I make it clear that we will not enter into any negotiations with these people. As I have also made clear on countless occasions—most recently in Afghanistan—our objective is to root out those preaching and practising violence and murder, in support of men and women of peace. President Karzai's message to former insurgents is that if they are prepared to renounce violence, abide by the constitution and respect human rights, there is a place for them in the legitimate society and economy of Afghanistan. He and his Ministers told me this week that already some 5,000 fighters have laid down their arms. We will support President Karzai and his Government in their efforts to reconcile all parties to Afghanistan's democratic constitution.
	We know also that Afghanistan will never be stable without the constructive engagement of its neighbours. During my visit, President Karzai agreed on the need for greater regional cooperation. We continue to work with the Afghan and Pakistan Governments, the G8 and others to help bring stability across the Afghan-Pakistan border. Iran, too, must start to play a more constructive role, and I urged President Karzai to turn the current ad hoc meetings and structures that he has with Pakistan and other countries into more substantive mechanisms to bring stability and security to the region.
	The third priority is reconstruction and development —always at its most challenging where poverty is combined with insecurity and insurgency, but a strong long-term commitment to which is vital for the Afghan Government if they are to take responsibility successfully for the future of their country. I can therefore announce to the House today that, in total, Britain will make available £450 million in development and stabilisation assistance for Afghanistan for the years 2009 to 2012. This money will cover short-term priorities and longer-term objectives.
	When I was in Afghanistan and met local business leaders, President Karzai and I agreed a comprehensive plan, to be taken forward jointly by the Afghan and British Governments and the Aga Khan Development Network, to attract private sector investment into the country and to stimulate new businesses. A new growth fund, starting with an initial £30 million, will kick-start the development of basic legal and regulatory frameworks, build Government capacity to involve the private sector in providing public services, and pilot business training programmes. This will be led by a council of Ministers, business representatives and other experts, who will build contacts with the private sector inside and outside Afghanistan. They will advise the Government on how to increase investment and economic growth, and monitor the progress being made. Britain will also provide an additional £10 million for small loans, which will be of special help particularly to women, to start up or expand businesses; 70 per cent. of the initial applicants have been women.
	Our long-term objective is to support Afghanistan's own national development strategy by channelling our aid through the Afghan Government—which we believe to be the best route to achieving sustainable progress and the best value for money—on a long-term basis, helping the Afghans to plan ahead and, with good governance, to focus on their own priorities of economic growth, improving health and education, and building rural livelihoods. But we also recognise the need for short-term, high-impact stabilisation projects—better roads, more reliable power supplies, clean water and sanitation—which can make an immediate difference to the lives of ordinary Afghanistan citizens and show them the benefits of improved security and governance. Part of the £450 million that I announce today will help to fund Britain's new cross-government stabilisation unit, which has Afghanistan as its first priority, and which, with a global budget of £260 million over the next three years, will drive forward reconstruction projects and provide expert civilian support to rebuild basic services.
	Afghanistan cannot hope for stability while the poison of the narcotics trade continues to flourish, so Britain—Afghanistan's lead partner nation in tackling narcotics—continues to support the Afghan authorities. We are providing £90 million this year to help them in their long-term efforts against the drugs trade. While the situation with the poppy crop in Helmand province is difficult, it must be our aim to match the progress achieved in the rest of Afghanistan, where the number of poppy-free provinces has increased from six to 13 through a combination of stronger governance, targeted eradication—on which I have urged President Karzai to move forward—disruption of traffickers, strengthening of the justice system, and promoting legitimate agriculture.
	We will continue to work with our partners who have proved steadfast in Afghanistan, and I welcome the recent announcements from Denmark, France, the Netherlands, Germany and Estonia that they will maintain or increase their troop numbers. This progress must, I believe, now be matched by contributions from other countries in NATO, the EU and beyond. We are talking to all our partners to address the immediate need for more training teams for the Afghan security forces, especially the police, and we are having detailed talks with a number of countries on more support helicopters, which are needed. Where countries are unable to deploy their own troops or equipment, we are urging them to look at innovative ways to burden share and to help to fund those countries that can provide troops and equipment.
	Having described the challenges that we face in Afghanistan, I have set out our long-term commitment. It is to build on the military progress made so far by helping the Afghans to take greater leadership across security, governance and economic development. Because this priority and the need for a more consistent, integrated and co-ordinated international approach are now recognised across our partners, Britain continues to push for what will be the next step in this process: the appointment of a strong UN envoy to bring greater coherence across the international effort in security, governance and development and in relations with the Afghan Government.
	Britain will continue to fulfil our obligations to the Afghan people and the international community. We will support the Afghan army, police and Government as they progressively take over greater responsibility for their own security. We will work with our international partners and help the Afghans themselves to strengthen stability, foster democracy and build prosperity. At all times we will support the hard work, dedication, professionalism and courage of our armed forces, who are doing everything in their power to defeat terrorism and to lay the foundations of a stable and secure future for Afghanistan. I commend this statement to the House.

David Cameron: I thank the Prime Minister for his statement; there is much in it that we support and welcome, particularly what he said about equipment. With the recent success in Musa Qala, I believe that we can say that the men and women serving in Helmand today are every bit the equal of those who stormed the beaches in Normandy, who held the line at Inchon in the Korean war, or who retook the Falkland Islands.
	Christmas approaches, with our service personnel away from their families. I am sure that this is the time that the whole House will want to send them our very strongest backing. [Hon. Members: "Hear, hear.] I have been to Helmand twice in the last two years, and I have set out previously the significant course corrections that we need to make to avoid failing in Afghanistan. To prevent failure, I believe that we have to follow three principles: first, that, as the Prime Minister said, military success alone is not enough; secondly, that greater political progress is needed, based on a practical approach, rather than believing that we can impose a fully fledged western democracy in a deeply traditional society; and, thirdly, that the international effort needs to be much better co-ordinated.
	Before I take each of those in turn, may I ask the Prime Minister about the reports in today's newspapers? Press headlines say clearly that the Government plan to talk to the Taliban, but the Prime Minister said in his statement that "we will not" talk to "these people". Does that not demonstrate once again the error of briefing the press in advance of making statements in this House? But is it not more serious than that? These appear to be completely conflicting messages, and they really could undermine our forces in what they are doing. In his reply, can the Prime Minister clear this up and tell us what he will do to investigate how this took place?
	Let me take each of the three principles in turn. First, on the military, is it not the case that with the international security assistance force, Operation Enduring Freedom and the separate Afghan military commands, we simply have too many chains of command? All the evidence in defeating counter-insurgencies anywhere in the world is that there has to be a single chain of command. What progress has the Prime Minister made with the US and with NATO towards getting these rationalised?
	Specifically on British forces, we have seen success in Sangin, at the Kajaki dam and now in Musa Qala, but is the Prime Minister satisfied that this time, there are sufficient Afghan forces to hold the ground that has been taken? On equipment and training, Lord Guthrie recently raised the example of a brigade being deployed to Afghanistan without having first been trained on medium machine guns. Is the Prime Minister satisfied that this will not happen again? As he knows, one cannot spend time in Helmand without hearing concerns about the lack of battlefield helicopters. He talked about that in his statement. Does he now regret the decision to cut the helicopter budget by £1.4 billion in 2004, and can he explain why the Government waited until this year before placing orders for new and converted helicopters?
	The Prime Minister talked about burden sharing. Can he tell us precisely what progress is being made in ensuring that we get a greater contribution from our NATO allies?
	On forces welfare, the Prime Minister has taken up our suggestion of additional pay in theatre. Will he now take up another suggestion—simple—that soldiers' leave should begin when they step off the aircraft on UK soil, not when they leave Afghanistan?
	On pay, is it not now clear that the new Ministry of Defence computerised pay system is not working properly? We had problems with the Royal Air Force earlier, and now we have some Territorial Army officers not being paid at all. Can the Prime Minister tell us today how many people are not being paid properly and what he is doing to put these failures right?
	Next, political progress. The general problem is that the writ of the Karzai Government does not extend to the whole country. In many places, Helmand included, the Afghan police are seen as corrupt. What steps are we taking in terms of mentoring, leadership, training, pay and discipline structures, and after six years, why are we still not getting this right? The UN drugs and crime chief has said:
	"The government's benign tolerance of corruption is undermining the future".
	A new anti-corruption tsar, Izzatullah Wasifi, has been appointed. Will the Prime Minister comment on reports in the newspapers that Mr. Wasifi was once convicted in the United States of attempting to sell $2 million-worth of heroin?
	Thirdly, on co-ordination, aid has been provided by the US, the UN, the EU and NATO as well as by dozens of smaller agencies. We have been arguing for more than a year that there should be a single high-profile figure to take charge of co-ordinating the international effort and providing real leadership in the way that Lord Ashdown did in Bosnia. The Prime Minister spoke about it, but can he actually tell us when he thinks it is going to happen?

David Miliband: February.

David Cameron: February. Thank you, but why was it not in the Prime Minister's statement? The whole point is to announce things to the House of Commons! I know that the Foreign Secretary's speeches are normally corrected after they have gone out, but he might want to advise the Prime Minister rather more about how to get the content right in the first place.
	On aid— [Interruption.] Calm down, dear; there are more questions to answer. On aid, can the Prime Minister—with the help of the Foreign Secretary, who is now fully engaged in this—tell us how much of the very substantial UK aid is being spent in Helmand and how much in the rest of the country? Should we not be focusing our aid efforts to a much greater extent where our soldiers are deployed and where so much is at stake?
	This country is giving a tremendous amount to Afghanistan in money and in lives. Conservative Members believe that it is a worthwhile effort, but the country wants reassurance. With that in mind, can the Prime Minister give a commitment to full quarterly reports to Parliament on this issue? Ultimately, as the Prime Minister knows, our success or failure in Helmand depends on the ordinary Afghan and on whether he or she feels safer and better off since British forces arrived. Does the Prime Minister feel that we are in danger of disappointing the high hopes of security and reconstruction?

Gordon Brown: First, let me deal with where we agree. We agree on praising the bravery, courage and professionalism of the forces. On Monday, I met some of the men who had either been in Musa Qala or who were about to go there, so I know what a tremendous effort British forces have been part of—working with the Americans and with the Afghan forces themselves, while at the same time taking a leadership role with enormous skill, expertise and bravery. They have reason to celebrate a huge success this Christmas, which turns back the Taliban at the time when people are retreating to the hills for Christmas. That is a psychological blow against the Taliban as well as a military success. It means that over the next few months we can build on what we have achieved in Musa Qala so that people in that area have a stake in the future—a Taliban-free future for that province.
	We also agree that work has to be done with the Afghan Government on fighting corruption and the drugs trade. We agree that there is a need for a co-ordinator, and we have been pressing for that for some years. At the same time, the changeover will take place in February, as had been announced previously by the Government to the House of Commons.
	We further agree that it is important for our aid money to show results in Helmand where we are based. Of the £450 million going into aid over the next few years, a very substantial part will go to Helmand. It is also important to build up the government of Afghanistan, so we want to increase the authority of the national Government over the whole country. That is why some of our resources are going into building systems of government, including for economic development across the whole country.
	Let me repeat what I said in my statement—that our aim is to isolate and eradicate the Taliban insurgency and to isolate the leadership. We are not negotiating with the leadership and we do not propose to do so. However, we want to support President Karzai in his efforts at reconciliation. If he is successful in bringing across members of the previous insurgency, who then declare that they will give up fighting, support democracy and be part of the system, that will show that the efforts to achieve reconciliation will have been important to the whole country's future.
	The right hon. Gentleman rightly stressed the importance that should be attached to the Afghan leadership and the Afghan people taking more ownership. I repeat that there will be 70,000 Afghan members of the armed forces by the end of next year; 20,000 more will be trained during the course of next year—and at a very high level because they are benefiting from the expertise of the British forces. Forces on the ground tell me that the Afghan army is well trained and well equipped for the tasks that it has to carry out.
	On equipment, six Merlin helicopters have been ordered and will be available later, while eight Chinook helicopters are being upgraded for the work that can be done in Afghanistan. I have also announced that new blades are being fitted to Sea King helicopters for such work. As part of burden sharing, I have approached a number of European Governments, particularly in eastern Europe, who are not involved to the same extent as we are in the Afghanistan effort, and asked them to provide helicopters to support the NATO effort. I am confident that, in addition to the helicopters that we are adding to our fleet, we will get more support from those east European countries as the process of burden sharing takes root.
	The right hon. Gentleman raised several other issues. On pay, we have a new computer system and I believe that the Defence Secretary's efforts to ensure that it improves and gets the right payments to people are now bearing fruit. On the question of payment to the troops themselves, I think that it will have to be recorded that over the last year, we have tried to improve the position both through the troops' pay settlement and through the allowances given for being at the front. We in Britain have a six-month rota, while America tends to be longer, which is one of the reasons why the arrangements that the right hon. Gentleman asked about are different. There is a £2,300 payment for being on the ground in theatre for several months.
	We have also improved the allowances available for council tax, which has been reduced by £140, while at the same time extending facilities available for e-mailing, computers and telephoning—providing more minutes and more facilities for contacting relatives at home. Postal services have also been made free for the armed forces, which is entirely right. I am conscious that we need to do more on accommodation for the armed forces at home, which is why a substantial amount of the spending settlement has been allocated to accommodation.
	On each of those areas where questions have rightly been asked about the support that we give our armed forces, we are systematically taking action to improve what treatment is available. That is in recognition of what I suspect the whole House will want to support—the courage, professionalism and dedication of the people who give up their time to serve our country and serve democracy for the future.

Vincent Cable: The death of Sergeant Johnson reminds us of how much is at stake here. I welcome the Prime Minister's statement, particularly the positive feedback from the conflict at Musa Qala, but is it not the case that all rural guerrilla armies attach little importance to holding towns, and that, conversely, the military command of NATO has acknowledged that it finds it very difficult to hold territory that it has cleared? What has fundamentally changed the dynamic of this conflict to give the Prime Minister a more optimistic view of the future?
	In respect of the UK contribution, the Prime Minister made some helpful, sensible and practical suggestions about the supply of helicopters, but has not the number of functioning Apache helicopters fallen from 60 per cent. to 50 per cent. over the last year? Is not one of the lessons the fact that we need to think more fundamentally about reorientating the defence budget towards immediate defence needs rather than those of the cold war? Will he have a fresh look at the very large £6 billion Typhoon commitment, which, if cancelled, would free up resources for immediate defence needs and troop welfare?
	On the number of troops employed, is the judgment about numbers based on defence needs or is it simply reflecting the reality, acknowledged by the chiefs of staff, that British forces—including the 4,700 who were tied down at Basra airport providing cover for the continuing American presence in Iraq—are massively overstretched?
	The Prime Minister is absolutely right to stress the importance of development assistance and we greatly welcome that, but is it not true that the annual budget of the Afghan Government on development is about £18 billion and that a large part of it is disappearing into waste and corruption? What is being done to introduce more effective safeguards?
	The Prime Minister acknowledged the role of the poppy economy in the lives of peasant farmers in Afghanistan, so what is he doing to stop the indiscriminate destruction of poppy crops driving those farmers into the arms of the Taliban?
	Finally, may I ask the Prime Minister about the precarious position of British public opinion? Is he aware that surveys in the past year suggest that a majority now favours withdrawal within a year and is increasingly concerned about the 86 deaths? There is a consensus among the parties in the House that we should continue to support the Afghan forces, but what is he going to do to persuade British public opinion that this activity is necessary and right?

Gordon Brown: I had hoped that there would be all-party agreement on what we are trying to achieve in Afghanistan. I am disappointed that the hon. Gentleman does not fully appreciate what I think is the central message of Afghanistan. Afghanistan is the front line against the Taliban and we must prevent the return of al-Qaeda to use the country as a base, and to do so we must strengthen the politics, society and economy of Afghanistan. I hope that that will be common ground.
	Where we have had to make sacrifices and where we are in for the long term, of course we must persuade the British public continuously of the importance of what we are doing. The hon. Gentleman asks what has changed in Musa Qala. What has changed is that we now have competent Afghan forces, which are able to move in and take control of the area with the support of the Americans, the British and other NATO forces. I believe that over the next period of time we shall see an ever more competent Afghan army, given support by trainers from Britain and elsewhere. At the same time, as I reported, people who either had an indirect relationship with the Taliban or were previously fighters are coming over and deciding that their future lies within the democratic constitution of Afghanistan.
	As far as the weaponry is concerned, I mentioned that Merlin, Chinook and Sea King helicopters would be moving into Afghanistan in greater numbers over the next period of time. We need fast jets as well, as the Secretary of State for Defence reminded me, but the hon. Gentleman should not pose one against the other. We are determined not only to provide the equipment that we can for our forces, but to persuade other countries to share the burden. If there is one lesson of the past year or two, it is that we can, if we work at it, persuade other countries to play a bigger role in making their contribution to Afghanistan.
	The hon. Gentleman also raised the issue of heroin. It is true that half the heroin of the world comes out of Helmand province. It is also true that although we have made huge progress in other provinces, where poppy growing has ceased, we have not made the progress that we want to make in Helmand. Addressing that issue will mean a mixture of things. I hope that he would agree that it will mean eradication of the crops on the ground, rather than aerial bombing, as well as persuading people to take up different activities. This is not a short-term easy win for us, but something that we have to work at over the next period of time.
	One of the ways we can do that is by strengthening what the hon. Gentleman rightly said is a weakness—the central Government of Afghanistan. Of course there has been corruption, and waste and failure, but it is important to remind ourselves that progress has been made. However, as I stressed to President Karzai when I met him, it is important that he should have Ministers in place who command confidence. It is also important that he should work with the development effort, which should be more co-ordinated, on behalf of the 38 nations involved in Afghanistan. If we can do both those things over the next year, I believe that we shall see greater progress.

Linda Gilroy: May I congratulate the Prime Minister on the comprehensive framework that he has announced to the House and on building on the military success of our servicemen and women from throughout the UK, including marines based in Plymouth, who will be deployed again next year? I understand that a handful of women have joined the Afghan police service. Will my right hon. Friend encourage the Afghani Government to do more in that respect? Will he also encourage the Westminster Foundation for Democracy, the Inter-Parliamentary Union and the Department for International Development to put some money into a programme for Afghan parliamentarians, to help them to develop the capacity to hold the Afghan Government to account?

Gordon Brown: I am grateful for what my hon. Friend has said, particularly about her constituents who have performed brave service in Afghanistan, through the work of the Navy and the naval reserves. I also agree with her that women have an important part to play in the future of Afghanistan. When I said that Afghanistan had a higher proportion of women MPs than most western countries, I was talking about a country where 80 per cent. of women were not given the chance to read and where primary and secondary education were denied them for years. Enormous advances are being made. I also agree with my hon. Friend that we should support the development of a police force that comprises women as well as men, and I shall look at what she said about that.
	There is another point to make. The advances that can be made in local government can be made also with support from local councils and people who are involved in local government in this country. I know that strenuous efforts are being made to link up experts on local government here with those people in Afghanistan who want to create better systems of local government there. In all those areas, local communities here as well as the Government have a role to play.

James Arbuthnot: I welcome this statement and I echo the Prime Minister and my right hon. Friend the Member for Witney (Mr. Cameron) in congratulating and thanking our quite outstanding armed forces. The Prime Minister referred to greater burden sharing by our allies. Yes indeed—but how, precisely, does he intend to achieve that? Does he expect that the statement of requirements issued by NATO itself, currently thousands short, will be fulfilled, and if so, when?

Gordon Brown: I am grateful for the right hon. Gentleman's initial remarks, in which he praised the courage and dedication of our armed forces. I am also grateful for what he said about burden sharing, which must be—this is common cause among us all—an important part of the next stage. When it comes to vital equipment, I believe that it is possible to persuade some of our allies in NATO—and, indeed, some outside—to make a contribution where they have equipment that can be put on the ground. I am thinking particularly of countries that I have talked to in eastern Europe that have helicopters, which could be of great benefit as transport helicopters in Afghanistan.
	The right hon. Gentleman is right that that raises bigger questions about burden sharing within NATO and about the procedures that will be adopted in the future. I know from talking to the Secretary-General of NATO that when it meets at Easter to discuss those issues, burden sharing will be on the agenda. That might be the right time to consider both financial arrangements and equipment arrangements that move NATO forward from where it has been, to a system where there is far greater burden sharing built into the basic things that NATO does.

Frank Field: May I say to the Prime Minister that although some of the country might have views about how quickly our troops should withdraw from Afghanistan, the whole country joins him in expressing admiration for the courage that they show? If a single message should be sent from the House and from this country, it is the second message, not the first. I should like to take him back to his statement about the link between the poppy trade and the warlords. Does he accept that no long-term success in Afghanistan will be ours and its people's until that trade is broken? Might I probe him on—

Mr. Speaker: Order. There should be one supplementary.

Gordon Brown: My right hon. Friend is absolutely right. The common message coming from the House is one of support for the armed forces, particularly on the brilliance and success of the recapture of Musa Qala. He is also right—I have talked to him at some length previously about this—that there is no future for Afghanistan's economy as long as people hang on to the idea that Afghanistan can still be the centre supplying most of the world's narcotics. That is why the effort that we are making with the Afghan Government to try to eradicate narcotics on the ground, but at the same time building up systems of law and order and giving alternative livelihoods to the agricultural population, is very important. I know that my right hon. Friend has views on that and I shall be happy to meet him again to talk about it.

Roger Gale: At Prime Minister's Question Time and at the start of his statement, the Prime Minister absolutely correctly paid tribute to the fallen men and women of our armed services in Afghanistan. Will he turn those words into substance and honour the undertaking given by his predecessor, by allowing his Ministers to announce funding this afternoon, so that the families of those fallen can be legally represented at inquests?

Gordon Brown: This is a matter that we are looking at. I said in the House last week that the delays in inquests were unacceptable. We have put some more money in to make it possible for them to be speeded up, but we will also look at the other issues that the hon. Gentleman has raised.

Kevan Jones: May I welcome my right hon. Friend's statement? As someone who has visited Afghanistan three times in the past four years, I have seen progress, particularly in Kabul, but there is still a hard job to do in the south. May I caution him on the eradication of the poppy crop, which should not be done without offering alternative livelihoods, as it could drive people into the arms of the Taliban?

Gordon Brown: That is precisely why the aid budget that we are announcing will focus on agricultural livelihoods, and on increasing people's opportunities to obtain alternative work in the provinces that we are discussing. The business leaders whom we meet in Afghanistan are well aware that it needs a far more diversified economy. When we visit the local areas, it is clear that unless we provide alternative employment it will be possible to exploit local people's need for work and prosperity through the narcotics trade. It is therefore essential for the aid budget and the development work that we are doing to offer alternative livelihoods.

Bob Russell: In the new year, 16 Air Assault Brigade from Colchester garrison will be deployed to Afghanistan. Can the Prime Minister tell us how many of the 38 countries that he mentioned have fighting personnel in the front line in Helmand province, and exactly what he means by burden sharing?

Gordon Brown: I should be happy to write to the hon. Gentleman, including all the figures.
	It is true that many countries have sent in members of their forces in a non-fighting role. It is also true that some countries are prepared to offer troops, but cannot afford to pay their way when they are in Afghanistan. That is what I mean by burden sharing. Could we have a more equitable arrangement, whereby countries that have troops are able to send them in while others that are not prepared to send their troops are prepared to finance them? Could we have equipment from countries that are not prepared to send their forces, for which other countries could pay if the countries that have sent it cannot afford to do so? That is what I mean by moving forward burden sharing in future.
	The hon. Gentleman's constituents who are going to Afghanistan should be assured that we will do all in our power to ensure both that they are fully equipped, and that they have the support of a stronger Afghan army.

Quentin Davies: The Prime Minister's speech to our troops in Iraq the other day was deeply appreciated by military families in my constituency, and I believe that the statement he has made today will be equally and widely appreciated.
	Is it not the case that if the Taliban had succeeded in their aim of retrieving power in Afghanistan and turning it once again into a logistical and training base for international terrorist operations, and if the terrorists who attacked London and Glasgow in the summer had had the benefit of a six-month course in bomb-making and detonation techniques in Afghanistan under the Taliban, the results of those attacks might have been tragically very different?

Gordon Brown: My hon. Friend is right. Afghanistan is not only the front line against the Taliban. If we were to allow al-Qaeda to base itself in Afghanistan again without fear of being invaded or taken over by British or other forces, we would store up huge problems for London, for Britain and for all the other countries where terrorism wishes to make headway.
	The fact that al-Qaeda has been forced across the border of Afghanistan creates special problems for us in Pakistan. As I told President Karzai, it is important for Pakistan and Afghanistan to work together to deal with those border issues, and in future years it will be important for us to secure even greater co-operation with other countries that are involved so that we can deal with the issue of where al-Qaeda is basing its operations.
	Nevertheless, my hon. Friend is absolutely right. I think that the whole country can be persuaded of the importance of this: leave Afghanistan to the Taliban and we have huge problems; allow al-Qaeda to gain a base in Afghanistan and we have huge problems. That is why we make a long-term commitment to the Afghan people.

Malcolm Rifkind: Yesterday the American Defence Secretary expressed severe and justified public criticism of the inadequate contribution of some NATO allies. Does the Prime Minister agree that the risk we face is not only inadequate performance in Afghanistan as a consequence, but severe damage to the long-term future of NATO? Will he give serious consideration to urging his fellow Heads of Government in NATO to attend a early meeting of Heads of Government—not in a crisis atmosphere, but in a spirit of constructive and measured deliberation—with the aim of agreeing on a common strategy and a fair sharing of the burden that is possible for all member states?

Gordon Brown: The right hon. and learned Gentleman is absolutely right. He has some experience in matters involving NATO, and this is a NATO mission. It should be borne in mind that we will meet in Bucharest in April to discuss the issues that should be on the agenda and must be addressed.
	While the right hon. and learned Gentleman is right to say that there has not been an equality of burden sharing—not only is Britain using its forces in Iraq, but it has a substantial role as the second presence in Afghanistan—it is also true that 38 countries are involved in the mission. The fact that so many countries are prepared to play a part represents an enormous success. The issue now is whether we can achieve the better burden sharing that will enable other countries to play a bigger part in future, particularly, I suspect, in the provision of equipment, if not of forces. Those are the issues that will have to be discussed in Bucharest at Easter.

Mike Gapes: The Prime Minister spoke of the importance of constructive engagement on the part of Afghanistan's neighbours. When members of the Foreign Affairs Committee visited Iran last month, the Iranians told us that 3,000 of their policemen had been killed while trying to intercept the heroin being smuggled into their country, which has an estimated 2 million addicts. Last year, the Pakistani authorities expressed concern to our Committee about the fact that the Afghan side of the border was almost unpatrolled. Although Pakistan is losing tens of thousands of people in those areas, there is a big problem relating to movement backwards and forwards. What discussions has the Prime Minister had with the Afghan Government to try to increase their co-operation with their neighbours, who have legitimate concerns?

Gordon Brown: As Chairman of the Foreign Affairs Committee, my hon. Friend takes a great interest in these matters, and is an expert on the issues that he raises.
	We now need law enforcement officers to mentor the counter-narcotics police so that a far better job can be done in Afghanistan itself. I impressed on President Karzai that the failure to appoint a new counter-narcotics Minister to fill the current vacancy was sending the wrong signal to the rest of the world, and I hope that someone will be appointed who can control the effort effectively. The United Nations-administered Afghan counter-narcotics trust fund is also important, but some countries have yet to make the contributions that they pledged. We must work with the countries that my hon. Friend mentioned, otherwise the efforts in one country will be in vain. That is why co-operation with Pakistan in particular will be important in the future.

Peter Tapsell: While I welcome the Prime Minister's statement, which was more realistic than any statement about Afghanistan during the Blair years, will he keep it very much in mind that the basic stumbling block to all the admirable aims that he has announced is the fact that the one thing that unites all Afghans is their hatred of foreign troops in their country?

Gordon Brown: It is precisely because Afghans should be enabled to take more control over their own affairs that we are training the Afghan forces. We are talking about an army of 70,000 by next year, and a larger number of police. The biggest difficulties have involved preventing both corruption and inefficiency among the police. I think that, over time, the Afghan Government will recognise that point by building up their own security forces—particularly their army and police—and by working with the countries that are enabling them to do so, they can provide the best possible guarantee for the future of Afghanistan.

Dai Havard: When I visited Helmand last July, I saw British troops giving out leaflets saying that we did not do eradication. I welcome what the Prime Minister said about putting together a plan involving stronger governance and targeting traffickers, but may I caution him that, as my hon. Friend the Member for North Durham (Mr. Jones) said earlier, it is not the individual producer but the big guns that we need to target? May we see the top 20 and their lands, chattels and supporters being attacked, as opposed to the ordinary Afghan farmer?

Gordon Brown: That is one of the reasons for the need to build up the infrastructure of police, courts, justice—through judges—and law and order. Only by building up that infrastructure can we deal with the very people to whom my hon. Friend refers. However, I would not underestimate the importance of giving people alternative livelihoods so that they can break free from the control of drugs barons in the area. It is a combination of both approaches that will make the difference.

Angus Robertson: I thank the Prime Minister for providing a copy of his statement in advance. On behalf of the Scottish National party and Plaid Cymru, I echo the sentiments of others about our service personnel, and especially their families, in the run-up to Christmas.
	Here in the House we have often heard reassurances and promises about combating the drugs trade, but the United Nations has confirmed this year that heroin production has risen to a record level. Apparently, it represents 92 per cent. of opium production in the world. Can the Prime Minister give us a firm assurance about his target for the reduction of narcotics? How much does it involve, and by when?

Gordon Brown: We have moved from a situation in which we had very few poppy-free, or heroin-free, provinces to a situation in which we have quite a number. Our aim must be to increase that number, but the issue in Helmand is a very big one, because it is responsible for half the production. That is where we must make progress.
	I am not setting a target. What I will say is that while the combination of the measures that we outlined is necessary, what is also necessary is a central Government who are prepared to take the action. That is why I am impressing on President Karzai the importance of his taking a lead.

Sarah McCarthy-Fry: I welcome the Prime Minister's statement, particularly the promise of more funding for building the capacity of the directorate of local governance. In other emerging democracies, it has been shown that where there are more women in local government, funding is more likely to be directed towards areas such as health and education. Given the low status of women in Afghanistan, particularly outside the main cities such as Kabul, will the Prime Minister do all he can to prioritise the funding towards confidence building and skills for women so that they have the confidence to put their names forward for election in local government?

Gordon Brown: In Helmand province there are already women who are playing their part in local government, but obviously the numbers and the ability to participate need to be strengthened. That is why the Secretary of State for Communities and Local Government will be working with people in Afghanistan to enable us to give whatever expertise we can to help build some of the systems of local government for the future. I also announced our support for local community volunteers, so that they can take more control of policing of areas. So there will be a combination of measures, but my hon. Friend is right that women being more represented and at a higher level in all the different areas of Afghanistan will make a difference to the improvement of health and education, which is crucial for the welfare of the people.

Peter Lilley: Can the Prime Minister confirm that the biggest single source of income, accounting for up to half of GDP in Afghanistan, is the opium trade, and is not therefore the central dilemma we face how to win the hearts and minds of people while promising to eradicate half their income without offering any concrete alternatives other than the following two words in the statement—"legitimate agriculture"? Does not the failure to face up realistically to this dilemma leave a black hole in the Prime Minister's strategy?

Gordon Brown: The right hon. Gentleman is right on his first point: an economy that is wholly dependent on the crop he mentions is an economy that will not work well in the future. However, he is wrong on his second point: I did, of course, mention alternatives in agriculture, but I also mentioned building the social and economic infrastructure of all the areas through the aid and development programme that we are practising. We find that there is in Afghanistan a desire for roads and infrastructure, and then for the building of schools and hospitals, of course, but also for the creation of small businesses. Many people are operating in Afghanistan—some people have come from Britain to do so—to create microcredit finance for small businesses.
	I agree that it is necessary to have alternatives to agriculture, but I disagree with the right hon. Gentleman's other point, as we are trying our best to do more to provide those alternatives; we are going beyond simply the offer that there is an alternative to agriculture by also making that possible through the initiatives that we have in place. I may also say that in Musa Qala we will move in very quickly with the offer of jobs, which is important, and the offer of new facilities, which will enable the local economy to start to flourish again.

Michael Clapham: On the question of encouraging a positive approach from Iran, my right hon. Friend will be aware that in February 2001 the late Member for Redcar, who then had the remit for drugs, visited Iran to come to an agreement on working together to disrupt the drugs trafficking trade. Does my right hon. Friend believe that that agreement could form the basis of encouraging a revival—perhaps we should put it that way—of a more positive approach from Iran?

Gordon Brown: The Iranians themselves have an interest in tackling this problem. I will look at what my hon. Friend says about the agreement that is still standing with Iran, but I think that it is also important to recognise that action within Afghanistan is urgently needed.

Jeffrey M Donaldson: Early in the new year, the 1st Battalion the Royal Irish Regiment, supplemented by Territorial soldiers from the 2nd Battalion, will leave for a tour of duty in Afghanistan. The Prime Minister has heard from the Leader of the Opposition about problems with pay. Many of those Territorial Army soldiers transferred from the now-disbanded home service battalions, yet several months after their transfer they are not receiving the proper pay. Will the Prime Minister assure me that before those soldiers leave their families to serve this country with pride in Afghanistan, they will be paid properly?

Gordon Brown: When I was in Afghanistan, I met soldiers from Northern Ireland, and their contribution is both appreciated and immense. I will take on board what the right hon. Gentleman says about the operation of the computer system in delivering the proper amounts of pay. The Secretary of State for Defence says that that is moving forward, and he will write to the right hon. Gentleman in the next few days.

Roberta Blackman-Woods: I thank the Prime Minister for his statement and the priority he is giving to Afghanistan issues. Does he agree that if the Afghans are to buy into the new state we must not only maintain security, but make progress in terms of economic development? Will he therefore press the United Nations to encourage the international community not only to be better co-ordinated, but to do more on security and economic development?

Gordon Brown: I want to praise the work of my hon. Friend in linking up with women in Afghanistan to encourage the emerging process of democracy in the country. She is right that we need the UN co-ordinator appointed for February, and we need that role to be better than the current one in co-ordinating the development efforts of all the different countries involved in Afghanistan and in building a strong relationship that is supportive to the Afghan Government. We also of course need the international effort she talks about to be expanded. We will, as a result of this statement, make all our efforts to do that.

Malcolm Bruce: I welcome the Prime Minister's statement. When members of the International Development Committee were in Afghanistan at the end of October we visited not only Kabul but the rural area around it, and Helmand in the south and Balkh in the north. There was a recognition that there was a real commitment and a long-term strategy, which people in Afghanistan appreciate—and people in this country need to understand that. In particular, I welcome the Prime Minister's commitment to additional development and reconstruction funding of £450 million, and I urge the Secretary of State for International Development to make a statement in the House at an appropriate time as to how it will be deployed, and to resist the call from the Leader of the Opposition to concentrate all those resources in Helmand as we must instead understand that we have to build up the capacity of the Afghan Government across the whole country.

Gordon Brown: Building up the capacity of the Afghan Government is in many ways the theme of the statement; we need Afghan ownership so that in security, economics and, of course, governance, Afghans can take the lead that is expected of countries when they are running their own affairs. As far as the budget is concerned, the right hon. Gentleman will, as a member of the International Development Committee, want to question in detail the Secretary of State for International Development on where the money will go. I can tell the right hon. Gentleman, however, that £350 million comes from the DFID aid budget, and the extra money is from the stabilisation fund that we created involving the Foreign Office, the Ministry of Defence and DFID. That money is spent on stabilising economies in difficulty and fractured societies. It will go as a priority to Afghanistan, because as he knows, that is where the need is now greatest. The £450 million that we talk about will be provided from a combination of development money and money from the stabilisation unit.

Angela Browning: Last month, Members attended a briefing of senior Army officers led by General Sir Richard Dannatt, at which the Secretary of State for Defence was present. One of the problems they identified was the lack of equipment for training purposes immediately before deployment. Clearly, there is a danger when servicemen suddenly find themselves using new equipment in theatre. What are the Government doing to address that problem that the Army has identified, and can they give us any idea of the time scale in which it will be dealt with?

Gordon Brown: I have also talked to General Dannatt about these issues. We have funded new equipment on the ground in Afghanistan and Iraq through what are called the UOR—the urgent operational requirements—so it is possible by the expenditure of large sums of money to get the most modern and up-to-date equipment quickly into the theatre or field. That is what we have been trying to do. I think I am right in saying that UORs have accounted for more than £2 billion in recent years, and we have set aside additional money over the next few years. If we are putting such equipment straight into theatre, that raises questions about the resources that we have available for equipment for training. We are now giving attention to that. The hon. Lady is right to raise this point, but it is a function of the success of getting the best equipment into theatre as quickly as possible.

Patrick Mercer: The Prime Minister will be aware that 18 months ago we warned the Government that one combat unit being sent to Afghanistan was wholly inadequate. Now there are five major units in theatre and the pips are squeaking on Army manning. Will the Prime Minister please dedicate himself to restoring the Army to full manning and reversing the disastrous decision to disband three battalions?

Gordon Brown: The hon. Gentleman is right that the Army wishes to, and should be able to, increase its establishment. In terms of the armed forces as a whole, when we came to power they were, I think, 95 per cent. established—in other words, 95 per cent. of the necessary level of troops were provided. I think that figure is now 97 per cent. He is therefore right that we wish to recruit and retain more troops for the armed forces—that is what we intend to do and that is what we budget for. He makes the important point that this is about recruitment and then about retention. We shall do whatever we can, in consultation with the armed forces, to move that forward.

Mr. Speaker: Order. I must move on, but I shall remember those whom I have not called for another time.

Opposition Day
	 — 
	[4th Allotted Day]

Military Covenant

Mr. Speaker: I have to inform the House that I have selected the amendment tabled in the name of the Prime Minister.

Nick Harvey: I beg to move,
	That this House notes the commitment, bravery and professionalism of the UK's armed forces in operations around the world; further notes with concern the detrimental impact that sustained operations on two fronts are having on the armed forces and their capabilities, resulting in critical overstretch; believes that the Government should conduct a new strategic defence review and reinforce it with regular reviews of defence after each general election; urges the Government to do more to honour its duty of care, notably through accelerating the improvement and upgrading of service accommodation, providing greater provisions for mental health and medical care for service personnel, ring-fencing the defence budget for welfare and introducing a Coroners Bill to help address delays in inquests into military fatalities; and calls on the Government to renew the Military Covenant and set up a cross-party Military Covenant Committee to monitor the state of the armed forces and their welfare.
	I very much welcome the opportunity to have this debate on the military covenant, and it is apt that it should directly follow the Prime Minister's statement on action in Afghanistan. I start by paying tribute to all our service personnel. It was clear from the statement that Members on both sides of this House are united in recognising the professionalism, courage and bravery of the world-class fighting force that constitutes the British armed forces. We pay tribute to them and to the veterans who have served before them.
	This has been an eventful week with the recapture of Musa Qala and the handover of Basra province to the Iraqi authorities, which took place, at last, a few days ago. We should acknowledge the success of the British troops, working alongside our allies, in both those theatres and we should recognise the honour and the duty that we owe them in the light of all that. The military covenant, and the commitment that it implies, extends not only to the troops but to their families. As Christmas approaches, we should remember that many families will be apart, and that people will be anxious and lonely on account of that. We should think of the families as well as the troops.
	That is what the military covenant is all about—the implicit two-way trust and bond between the armed services and the nation. Members of the armed forces put their lives on the line and risk everything for the nation, and in return the nation has a duty to look after them, ensure that they are in a position to do the job that is asked of them and give them the assurance that when they are risking everything in operational theatre their families are being looked after adequately back at home. In that sense, it is clear that more remains to be done.

Angus Robertson: Is the hon. Gentleman aware of the interviews that were conducted by the Ministry of Defence at the Argyll and Sutherland Highlanders' barracks in Canterbury during the summer? The feedback contained a litany of criticism, including complaints about partners being deployed for too long and people's pay being regularly messed up, and about a cut in the financial assistance for people travelling back to Scotland from their barracks in Kent. Are those not the kind of shortcomings that need to be sorted out?

Nick Harvey: I am sure that such shortcomings do need to be sorted out. The first of those—the too frequent deployment of the armed forces—is certainly worthy of our attention. It is well documented that our armed forces are very stretched. We have not, as yet, prised the word "overstretch" from the lips of any Minister, but senior officers and some of the defence chiefs are less reticent about acknowledging that we are asking an awful lot of the troops, and that that constitutes overstretch. For several years the defence planning assumptions have been exceeded and the harmony guidelines, which determine or indicate how frequently the armed forces should be out on active duty—six months in every three years—have been habitually broken. The hon. Gentleman refers to exactly that point when he tells us about the feedback from families. This is a serious issue and the situation cannot go on as it is. If it does, in the words of General Sir Richard Dannatt, there is a distinct danger that we could "break" the Army.

Jim Sheridan: Does the hon. Gentleman accept that things are not as bad as some people would have us believe? A recent independent survey carried out for the Ministry of Defence said that 92 per cent. of Army officers and 79 per cent. of other ranks felt proud to be in the Army.

Hon. Members: Of course they are proud.

Nick Harvey: The hon. Gentleman has heard the reaction of the House. Someone's pride in being a member of the armed forces and their satisfaction with their lot across a wide front are two very different things. I am picking up on the latter point, which is the subject of this debate.

Roger Williams: Does my hon. Friend agree that what most damages our forces, especially when they are on deployment, is the thought that their pay and allowances are not being put into their family's accounts to meet their requirements —as happened to a constituent of mine—and the failure of the joint personnel administration scheme?

Nick Harvey: There has been a series of difficulties with the transfer to the joint personnel administration. Possibly my hon. Friend goes too far by badging the whole thing as a failure, but teething problems have arisen as it has been rolled out across the armed forces. Mess-ups in the pay arrangements are hard to bear on top of everything else, but I pay tribute to those who have done their utmost to put those right as quickly as they can. As time goes on, the purpose of the JPA will be fulfilled, and it will result in an improvement across the piece in the long run.
	Part of the problem is that engagements in Iraq and Afghanistan have proved to be longer and more hostile than originally anticipated. The Prime Minister reiterated today that we are in Afghanistan for the long haul. There is a consensus across this House that that is the right approach and that, for the reasons articulated today, this is something that we must do. It will remain a serious burden on, and challenge for, our armed forces for many years to come. We must try to ensure that that long-term commitment does not mean that deployments abroad are longer and more frequent than they should be. That is one of the key senses in which the military covenant is being broken, and there is quite a lot of agreement in this House about that. Even the Government have acknowledged that there is some way to go and that more will need to be done. This autumn, the Royal British Legion launched its campaign to honour the covenant, and that has played a useful part in raising public awareness of these problems and concentrating the minds of the political community.

Malcolm Bruce: On that campaign, does my hon. Friend agree that probably every Member of this House regularly receives representations from constituents who have served in the armed forces and suffered as a consequence? In some cases, people have suffered loss of hearing from long exposure to blasts. Yet such people are often denied pensions or compensation—indeed, the MOD spends considerable sums denying any kind of connected responsibility. Does he agree that that matter ought to be part of the covenant and that it should be recognised that if one has a disability as a result of serving in the armed forces, one should get proper compensation?

Nick Harvey: In principle, that is supposed to happen. The whole point of the military pension is that, in principle, it recognises and acknowledges exactly those points and makes some ongoing remuneration to cover them. I come across those who are dissatisfied with the military pension award that they have received, as I am sure other hon. Members do. There sometimes seems to be a difference in attitude between how the British face up to things such as Gulf war syndrome and the approach taken by the Americans and other of our allies. They tend to be far more ready to acknowledge things and to step in to offer remedy.

Kevan Jones: Was it not the Labour Government who brought in the armed forces compensation scheme in the last Parliament, which for the first time introduced lump sum payments for those injured in battle? That was not opposed by the Liberal Democrats or by the British Legion, or even commented on at the time.

Nick Harvey: I am sure that nobody opposed that, as it was a worthwhile scheme. However, the hon. Gentleman and others will be aware of considerable dissatisfaction with the way it has worked in practice, in that those with compound injuries were compensated only for the most serious of them. The Government have announced some modifications to the scheme recently, and it remains to be seen how it will work in the future. It is a worthwhile scheme, but as yet it is not functioning satisfactorily.

Mike Hancock: Everyone welcomed that legislation, but the trouble was that it did not cover everybody. It contained exceptions that are causing great personal tragedies and loss, for individuals and families.

Nick Harvey: My hon. Friend is right, and further improvement is clearly needed. The Government have said that they will introduce a new Command Paper to address the welfare of the armed forces. That is welcome, although I do not know when it will be published. We look forward to seeing their proposals and we welcome the fact that it must be implicit in their intention to introduce such a paper that they are acknowledging that a wide range of problems needs to be put right. I hope that there will not be too much delay before we can see that Command Paper and start debating it.

Don Touhig: I welcome the debate launched by the Royal British Legion on this issue. I do not believe that the covenant has been broken, but we do have to do much more to improve it and to remain focused on it. The hon. Gentleman has mentioned several issues, including families and so on. I had the privilege of serving as the veterans Minister. Does the hon. Gentleman agree that we could better address some of the issues if we had a separate veterans' department within the Ministry of Defence to work with organisations such as the Royal British Legion to focus the whole time on issues affecting veterans and ex-servicemen and women?

Nick Harvey: That would certainly be a welcome further development. We welcomed the creation of the Veterans Agency, but taking that distinction into the heart of Government would further improve the work of attending to the particular needs of veterans.
	The Government are doing what they can to try to improve the lot of those on the front line. For example, they recently improved the parcels regime, so that more parcels get through to the troops on the front line. I recently heard from some serving troops in Iraq, who said that they were very grateful for the extra parcels from home, but there were some slight complaints that the Prime Minister's visit over the weekend meant that they were not able to use phones or the internet on Sunday night. That brings me to the thorny subject of the use of the internet and telephones.
	The troops were promised free wi-fi by the end of this year, but that now seems to have been pushed back to April or May next year— [ Interruption. ] Well, that is what I have heard in the past day or two. At the moment, the troops have to pay £2.50 an hour in two-hour chunks for internet access. They get 30 minutes' free phone time a week, for which they are no doubt very grateful, but beyond that they have to pay £10 per 90 minutes. There is a concern that some front-line troops may end up in debt by having to pay for things that might well be regarded as basic welfare provision.

Patrick Mercer: Is not the issue clear? Our servicemen and women are placing their lives on the line. Those sorts of things should be free to all those who are in the teeth of the enemy.

Nick Harvey: I entirely agree with the hon. Gentleman, and that is precisely my point. I welcome the advances that have been made, but it would be in the spirit of the obligation for those things to be entirely free.
	As we look forward to the next few years, to the financial commitments that we are promised and to the procurement budget, which appears to be in a state of flux, it is clear that we need another strategic defence review. I have made that point before, and received support for it from others. The last SDR was the best part of a decade ago, and the world today is very different in terms of the stresses and strains and the demands placed on our armed forces. Another SDR is long overdue, and if we are to better fulfil the military covenant and consider where our future priorities lie, it is an absolute necessity. We should get on with a new SDR now and we should also make a commitment to doing so regularly. The Americans have one every four years, and we should do so at least once a Parliament. I hope that the Government will give some thought to that.
	In the past 12 months—and especially in the last few days—we have seen a great deal of coverage of service housing. In December last year, the former Chief of the General Staff, General Sir Mike Jackson, described forces accommodation as "frankly shaming", and there has certainly been an unfortunate catalogue of errors. Lieutenant-General Sir Freddie Viggers, the Adjutant-General, recently conceded that the Army has to fight for receipts from asset sales to be reinvested in the housing programme, but our armed forces should not have to lobby the Government for quality accommodation for themselves and their families. The Government should be on the front foot and provide it anyway.

Bob Russell: Does my hon. Friend accept that before 1996, when the Ministry of Defence sold off any surplus housing or land, all the proceeds went into upgrading housing stock, but that following the privatisation by the Conservative Government, Annington Homes now reaps the benefit of those sales?

Nick Harvey: It certainly reaps most of the benefit, but the Annington deal was in 1996 and the present Government came to power in 1997. It is easy to blame the whole problem on the Annington deal, and it certainly was a rotten deal for the taxpayer, but since 1997 the Treasury has had huge capital receipts from the disposal of military assets and estates. If even a modest proportion of those receipts had been reinvested in the housing stock, it would not be in the sorry state it is today.

Kevan Jones: Does the hon. Gentleman not realise that one of the problems with the Annington Homes deal was that it tied the Ministry of Defence into a very bad deal that was entered into by the previous Conservative Government? If he is really concerned about it, has he thought about taking the matter up with his friend in the other place, Lord Owen, who is a consultant to Terra Firma, a company that has an interest in Annington Homes?

Nick Harvey: I am intrigued by the hon. Gentleman's description of Lord Owen as a friend, because I do not think that he is any friend of ours. However, I look forward to hearing what he has to say on this matter.
	The accommodation is in a bad way. Almost half the single living accommodation remains of the lowest standard—graded fourth out of 4—and only 18 per cent. is of the highest standard. The MOD itself estimates that even if current investment continues, 30 per cent. of the accommodation will remain at grades 3 or 4 after 2013. The Government do not have a sufficient sense of urgency. They are beginning to acknowledge the problem and are introducing programmes to try to address it, and I commend them for that. However, I do not think that adequate progress will be made or that the improvements that everybody wants and expects will be brought about on anything like a realistic or reasonable time scale.

David Hamilton: May I point out that that is not the case across the UK? In Midlothian, £60 million has been invested in the past few years and we have satellite television and state-of-the-art houses for the Highland Regiment. The Government propose to amend the legislation to give service personnel equal footing on the housing list when they leave the forces. There could be cross-party agreement—I encourage those on the Front Benches to do more on this—on the idea that ex-servicemen returning from duties should be given not just an equal footing but priority by all local authorities.

Nick Harvey: I would imagine that we all agree that that is desirable. If it were not for the desperate housing shortage, I imagine that something more akin to that would happen.
	Let me stick with the subject of housing. In its 2007 report, the Armed Forces Pay Review Body noted on the subject of the improvement programme for single living:
	"The initial SLAM programme launched in 2001 was scheduled to deliver 26,000 bedspaces at a cost of £750 million. Latest estimates show allocated funding of just £463 million to deliver 12,000 bedspaces."
	We have been falling behind on even the targets and programmes that the Ministry has established. Since 1997, the MOD has brought £2.2 billion into the Treasury through asset sales. In the year that the modernisation plan began, twice as much money went into the Treasury coffers from asset sales as went into improving soldiers' accommodation.

Don Touhig: rose—

Nick Harvey: I shall give way to the right hon. Gentleman one last time, once I have made the point that it seems to me the Government have not even used the resources at their disposal in the way the House would want.

Don Touhig: The hon. Gentleman makes a very important point. I agree with a lot of what he says about the inadequacy of single living accommodation and family accommodation. However, the MOD has put a lot of effort and finance into improving it. It may surprise the hon. Gentleman to know that when I was a Minister in the MOD responsible for those matters the former service chiefs and others whom we now pray in aid certainly never supported me when I said we should use the sale of assets to invest in accommodation for our servicemen. They may say that on television and radio now, but they never did a damn thing when they were in a position to do something about it.

Nick Harvey: I take the right hon. Gentleman's point. It is well made, and will be heard by some who serve in the armed forces. The Adjutant-General, Sir Freddie Viggers, has been willing to put his head above the parapet while he has been in post and say that too much accommodation is of a poor standard, too old or not modern enough in how it is fitted for families. We have a long way to go to bring about the improvement that we would want in the 41,000 units left in the estate.
	It is worrying that an average of 20 per cent. of married quarters—this was covered on the radio this morning—are empty at any given time. It costs the Ministry money to pay the lease for properties that are not filled. I accept that when large numbers of people are moved around, as happens with the armed forces, a percentage of the properties will always be empty. That would probably be a higher percentage than would be experienced by a commercial landlord. Nevertheless, it seems an awful lot when we consider that the MOD is paying to rent family accommodation in the private sector at the same time.
	The Ministry has told us that it would cost £750 million to bring all the family accommodation up to grade 1. It has also acknowledged that a minimum of £50 million will need to be spent each year to make the necessary improvements. The figures for 2006-07 show that the MOD did not spend anything like the £50 million that has been acknowledged to be necessary. The process, if it continues at the speed at which the work is being done and the money is being spent, rather than the speed that is being talked about, will take almost 50 years unless the MOD can improve radically on its performance in 2006-07. There is a long way to go.
	The contract to deal with repairs and complaints was given to the contractor, MODern Housing Solutions—MHS. In the year from March 2006 to March 2007, MHS received almost 9,000 complaints. The call centre received some 200,000 repair call-out calls in that year and dropped almost 9 per cent. while people were hanging on at the other end. It is no wonder that the families of our armed forces are getting somewhat exasperated wondering when essential repairs will be conducted, particularly when they involve ageing boilers in need of repair in the depths of winter. The situation was summed up well by General Sir Michael Rose when he said recently that
	"the system for the repair and maintenance of quarters has been repeatedly altered—something that has resulted in a much worse service for the soldiers... sub-contracting to commercial companies who have little understanding of the predicament of soldiers or their families has resulted in a bureaucratic nightmare which serves neither the soldiers nor the taxpayer."
	It is perfectly clear that there is a long way to go.
	My other major point concerns medical care. I recognise and acknowledge the vital role of the military ward at Selly Oak hospital and the extraordinary quality of the medical expertise available there. It is clear that that is now a world-class service and, combined with some good medical care in the operational theatres, it means that people are now surviving who previously would not have done so. That said, they are often seriously incapacitated following the initial acute interventions.
	It is the quality of the care afterwards that is so often criticised and that many believe to be lacking.  [ Interruption. ] It is criticised by families and, occasionally, by the victims themselves. I have spoken to some of them individually. They are very appreciative of the high quality of medical care available at Selly Oak. It is clear that their aftercare, when they can be pushed back into different parts of the UK, does not match the high standard that they have experienced at Selly Oak. I am surprised that Ministers are pulling a slight face at that, because many people have commented on it and would recognise it as being the case.

Mike Hancock: Some hon. Members are being critical of what my hon. Friend has to say, but they might be interested in the comments made by the former commander of the Parachute Regiment in Afghanistan. In a letter to the MOD, he said that his resignation was in part due to the shoddy treatment that injured soldiers under his command had received when returning to the UK. In a letter to defence chiefs, he was reported to have criticised the level of pay, the lack of training and equipment, the appalling housing and, most of all, the treatment of injured soldiers. Labour Members ought to be cautious about what they say when they ask for proof, given that a lieutenant-colonel has resigned from the Army because of the treatment of his troops.

Nick Harvey: My hon. Friend makes a good point. It is clear that those criticisms have been made, and on a wide front.
	In July, the Secretary of State for Defence said in response to the hon. Member for South Ribble (Mr. Borrow):
	"My hon. Friend is right in identifying the challenge that we would face if we had to bring in all those in the services receiving in-patient treatment, as they would barely fill two hospital wards on any typical day. In those circumstances, it is impossible to imagine how the re-establishment of a military hospital, for example, could provide the excellence of clinical care that those people would receive in NHS hospitals."—[ Official Report, 16 July 2007; Vol. 463, c. 5-6.]
	I take his point.

Kevan Jones: Will the hon. Gentleman give way?

Nick Harvey: I have given way to the hon. Gentleman twice already. We look forward to hearing what he has to say later.
	We take the Secretary of State's point about medical care, but I want to draw a comparison with the US, where there are some 180 military hospitals. If we were to translate that pro rata to the size of our armed forces, the UK would have around 33 military hospitals. I am not aware that anyone in this House, from any part of the political spectrum, has suggested that we should bring back a widespread network of military hospitals. I am not sure that I have heard any recent argument that we should go as far as having even one, but the Government have stated that they intend to explore whether there should be a larger network of military-only wards around the country. However, I would not expect each such ward to achieve anything like the degree of specialist expertise available at Selly Oak.

Linda Gilroy: Will the hon. Gentleman give way?

Nick Harvey: In a moment.
	The Government have stated that they will consider such a network, so they should tell us what progress has been made. The quality of aftercare, beyond the initial intervention, would be improved if there were military wards in more parts of the country, and especially where there are large numbers of military personnel in the geographical locality. The Government should either go ahead and introduce such a system, or put us out of our misery and acknowledge that they are not going to do so.

Linda Gilroy: I thank the hon. Gentleman for giving way? Has he visited the Stonehouse ward at the Ministry of Defence hospital unit at Derriford, the nearest military-managed ward to his constituency? Two thirds of the nurses there are from a military background, and the unit has a definite military ethos.

Nick Harvey: I am very familiar with that ward, and I greatly welcome what it does, but I want to know whether the Government intend to follow up on what they have hinted at in the past and establish a network of such wards. Indeed, I think that the Conservative amendment says as much.

Andrew Murrison: What?

Nick Harvey: Am I mistaken? Perhaps the Conservative amendment does not refer to such a network, but I want to know what progress the Government intend to make in that regard.

Andrew Murrison: I fear that the hon. Gentleman might be getting a little confused. I am certainly concerned that he seems to think we should have a military hospital for 13,000 servicemen. He should understand that, in America, a clinic with a few beds counts as a military hospital. We have many of those already in this country.

Nick Harvey: I am not sure whether the hon. Gentleman was deliberately misquoting me, but I was explaining that I did not think that anyone had asserted that we should have a network of military hospitals. I am making the case that we should have a network of military wards.
	Before I leave the issue of health, I want to make a few remarks about mental health. Following the operations in Iraq and Afghanistan, that is certainly one of the most significant long-term problems that the Government and society as a whole must address. The Government have begun various good initiatives to meet the challenge posed by mental health for both serving personnel and veterans, but I believe that we might face a significant influx of mental health patients in the years to come. Veterans are especially vulnerable, because they get less support from and have less involvement with the MOD when they leave the service and are at the mercy of civilian health care services.
	We know that mental health is something of a poor relation in the NHS. Additional NHS plans to develop community mental health services for veterans would improve the situation, and practitioners with some specialism in post-traumatic stress disorders need to be on the look out for, and ready to help, those who have served in the armed forces. At present, they are not being picked up well or readily enough by primary care trusts and health centres.
	We are of course aware of the good work being done for those still in service. The Government have their contract with the Priory, and Combat Stress is also doing a lot of work in the field. I welcome the recent improvement in that organisation's budget, but there is still a long way to go and there is a real risk that there will be a huge surge in demand for the services in the future.
	In conclusion, I believe that the military covenant would benefit from being written down in detail. It should be codified so that it is widely understood.

Kevan Jones: It is written down already.

Nick Harvey: That is true, in a manner of speaking, but I am talking about a properly fleshed out and detailed document against which progress can be monitored every year. An independent committee should conduct that monitoring and report back to the House so that the matter can be debated each year. There should be publicly accountable benchmarking of progress on key areas in the military covenant, because the bond between nation and military needs to be rebuilt and safeguarded. The confidence of the armed forces in the covenant needs to be re-established, and that means that there should be real entitlements and obligations.
	Finally, we should show that the commitment of the political community to the covenant is genuine. In recognising the work of our armed forces, everyone in this House needs to demonstrate that we are absolutely committed to honouring the military covenant.

Bob Ainsworth: I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
	"recognises the commitment, bravery and professionalism of the armed forces in all their operations; further recognises the enormous contribution made by service families to the effectiveness of the UK's armed forces and the debt owed by the nation to veterans; welcomes the major programme of improvements made by the Government to support all of these groups since 1997, including in the areas of medical support and improvement and replacement of sub-standard service accommodation; further welcomes the role played by ex-service organisations and other charities in contributing to the support of these groups and the Government's commitment to working closely with such bodies to improve support in the future; and commends the Government's decision to produce a cross-cutting Command Paper setting out the progress already achieved in this area and what more will be done in the future."
	There is considerable and quite proper interest in the House and among the public about how we meet our obligations to our armed forces and veterans, and to their families. In the run-up to Christmas, we have many people stationed abroad, many of them young and in dangerous circumstances. It is therefore appropriate that we express in full the feelings that we have for our troops and wish them the very best as they carry out the very arduous tasks that they undertake on our behalf.
	As the Chief of the General Staff has said, we need to ensure that we get the military covenant into balance, but we must bring the debate about these matters into balance as well. I welcome this debate, as it is important that all the people of Britain become more aware of the efforts and sacrifices being made by our armed forces on their behalf. In addition, we all need to think about our security over the years ahead and therefore about what level of spending we should commit to defence. Within that spending, we need to decide what our priorities should be, both in terms of operational capability and on the human welfare side of the equation.
	Wild exaggerations of some of the issues on either side of the argument contribute nothing of value, so let us look at the factual situation. On one side of the equation, we are asking a lot of our people: harmony guidelines are not being met in every circumstance, and one meets people who have been sent to operational theatres more often than is ideal. Yesterday, I went to the Millennium stadium to watch the medal parade and service of remembrance for 2nd Battalion the Royal Welsh. That battalion has deployed to Iraq three times, but that is not true across the whole of our armed forces.
	On the other side of the equation, we have already achieved a great deal. This year, the armed forces received a pay increase worth 9.2 per cent. for the most junior ranks and an average of 3.3 per cent. across all ranks. We have also introduced a tax-free operational allowance, now worth £2,320 for a six-month tour, and announced a council tax rebate.
	Despite the ritual accusations about our soldiers being poorly equipped, we have delivered significant investment in equipment for the front line. Some £2.6 billion of urgent operational requirements have been approved to meet needs for current operations, with £100 million being approved for each month this year. We have already announced six new Merlin battlefield support helicopters, the first of which arrived in July, and a sixth C-17 transport plane to move troops and equipment into theatre quickly. Moreover, the Prime Minister announced to the House earlier today an investment of more than £150 million in 150 new protected vehicles. The vehicles will be called Ridgbacks, and they will support operations in Afghanistan. That investment, alongside previous orders for the Mastiff and the Vector, brings the total number of new protected vehicles that we are delivering to support operations to more than 600.

Jim Sheridan: Does my hon. Friend agree that the new equipment was delivered not by the tooth fairy but by good, honest manufacturing workers? The vehicles and equipment were manufactured in this country and provided thousands of quality jobs.

Bob Ainsworth: I thank my hon. Friend for making that point. As Member for Coventry, North-East, as well as Minister for the Armed Forces, I am enormously proud that the up-armouring of Mastiff is being performed in my constituency. It is one of the vehicles in which those on operation have the most confidence, especially when they are deploying on dangerous routes where there is a mine threat.
	As my hon. Friend points out, the equipment is not delivered by the tooth fairy. When the hon. Member for North Devon (Nick Harvey) and Members of Her Majesty's Opposition say that we must do more across the piece in every area, we need to reflect on the context. In this case, the Liberal Democrats are clearer than the Conservatives, which does not often happen: there would be no more money for defence from the Liberal Democrats. That is what the acting leader of the Liberal Democrats said on television at the weekend, so in effect the hon. Member for North Devon is saying that all the initiatives he talks about and all the additional spending he asks for will have to come from cuts elsewhere in the defence budget.
	The Liberal Democrats have questioned the joint strike fighter and Typhoon, and of course we could solve some of the RAF's problems by entirely denying it fast jets, as the Liberal Democrats seem prepared to contemplate. However, they cannot advocate additional spending here, there and everywhere without acknowledging that there will be costs, as my hon. Friend has just pointed out so well. If they are not prepared to spend any more money—as they have clearly said—the price will be cuts elsewhere in the defence budget. If more money is to be spent on welfare, it will probably have to come from capability.
	The Conservatives' policies are not quite as clear, although as the hon. Member for Westbury (Dr. Murrison) seems to want to intervene, he may be able to clarify their position, but they do not answer the question; the silence is deafening. The Conservatives are reluctant to say what their policy is. Are we or are we not spending enough on defence? What is the policy of Her Majesty's Opposition? If they believe we are not spending enough, they should say so. Let us have an honest debate, not the constant pretence that gains can be made with nothing to pay. The Conservatives need to be as honest as the Liberal Democrats, and say whether they believe the defence budget is adequate. If they do not, they should say how much more it ought to be. I shall sit down so that the hon. Member for Westbury can tell us whether they would spend more on defence.

Julian Lewis: rose—

Bob Ainsworth: The hon. Member for Westbury has been reinforced.

Julian Lewis: For the umpteenth time, I shall tell the Government exactly what our position is. The defence budget is not large enough for the commitments we are undertaking, so a future Conservative Government will fully fund the commitments we undertake, which will mean either more money for defence or fewer commitments, or a position between the two. The right hon. Gentleman will know all about it when the time comes, in the run-up to the next general election, which cannot come too soon for us.

Bob Ainsworth: The House will have noticed that there was no answer either way on whether the Conservatives would spend more, just a wishful belief that the world will change, our commitments will reduce and we will live in a better place. We shall have to continue to ask whether there should be more or less for defence.

Jim Sheridan: I did not see the television programme on which the acting Liberal Democrat leader said that there would be no more defence spending. Would the £5 billion we have set aside for improving accommodation be cut, should the Liberal Democrats ever gain power?

Bob Ainsworth: What was said in answer to a question was clear: no more spending on defence. If more spending is needed on the areas outlined by the hon. Member for North Devon, who says we are not spending enough on accommodation and medicine, it will come from cuts.
	I turn to the capability we have delivered. Many Members attended a recent meeting to which Members of both Houses were invited by General Dannatt, when Colonel Westley, who has just returned from theatre, told us that the British infantryman is better equipped now than ever before and that there had been few complaints from his soldiers in the past few years.
	There have been decades of underinvestment in housing for our personnel, so it is taking some time to put things right, but we are moving fast and much of our accommodation is now of a good standard; for example, 95 per cent. of service family accommodation is graded in the highest two categories of condition. The hon. Member for North Devon talked about substandard accommodation, but all our properties meet the decent homes standard. Only 145 service family homes are in the lowest standard, and by the end of this financial year the number will be reduced to about 81, so it is wrong to say that thousands of service homes are substandard—they are not. Our standards are higher than those in other areas, and we have no intention of lowering them to make the figures look better. Our service people deserve better, but it is unfair to suggest that there are thousands of substandard homes.

David Hamilton: I am well aware that there is a major programme over the next five years to deal with accommodation, and that in my area about 10,000 houses are being built. Throughout the UK, an enormous amount of house building is taking place, so one of the practical problems might be insufficient workers for the repair programme. Would it be possible to set up a joint development programme so that local authorities and social housing associations combine with the Ministry of Defence? That would be very practical.

Bob Ainsworth: The rate of building work is a problem, as my hon. Friend points out. I would be happy to talk to him about the detail of his proposal to see whether it would have practical benefits.
	We have spent £700 million on accommodation over the past year alone. In this financial year, we shall be making improvements to 5,000 service family homes, including substantial upgrades to more than 600 of the poorest quality properties. By 2013, the number of bed spaces built or improved since 2001 will rise to more than 50,000. We are changing the law so that people leaving the services will be allowed a local connection to ensure that they have fair treatment compared with those in civilian life.
	On health care, the survival rates for battlefield casualties are unprecedented. We provide expert medical treatment and care to injured personnel on the front line. I have visited the field hospitals at Camp Bastion and Basra air station, where the care provided is world class, as it is at Selly Oak and at our rehabilitation centre at Headley Court. I welcome some of the things the hon. Member for North Devon said, but his comments about the standard of care provided were not fair and will not be welcomed by those who are doing their level best to ensure that our service personnel are properly treated throughout their health care pathway.
	It would be good if people looked at the facts. The hon. Member for Portsmouth, South (Mr. Hancock) intervened and talked about the comments of an individual who was leaving the armed forces. The hon. Gentleman is a member of the Defence Committee, which visits facilities on fact-finding tours all the time. If he takes part in some of those visits, he will find that he has a more rounded view.

Mike Hancock: I did not take part in the Committee's visit to Selly Oak, but I visited Selly Oak myself because service personnel from my constituency were there. I also visited the Ministry of Defence hospital unit in my constituency—that is on the record of the Defence Committee—so I am well aware of the situation. I represent a sizeable chunk of our service personnel—unlike the hon. Member for North Durham (Mr. Jones), who has now left the Chamber, who gave the Minister that information and who, sadly, does not have the opportunity to hear daily of the problems of service personnel.

Bob Ainsworth: I am glad to hear that the hon. Gentleman is participating in the Defence Committee, which praised health provision in its recent report. I am glad that he acknowledges that.
	Support for families of the injured is also important. We provide both family accommodation and funding to help with travel for families visiting injured personnel. We ensure the proper transfer of care when personnel are medically discharged, with properly managed resettlement and the monitoring of those who are seriously disabled for at least two years after their discharge.
	On mental health, the risk of psychological injury as a result of operational service is a particular concern. All the research—our own research and independent research—indicates that the risk is small. However, we take it very seriously. These are serious and disabling conditions, but they can be treated. We have measures in place to increase awareness and to mitigate disorders. They include pre and post-deployment briefings, support, assessment and, if required, treatment.

Philip Davies: I am pleased that the Minister referred to the importance of families. The Government have not provided proper legal representation for families at inquests. In the forthcoming inquests of Flight Lieutenant Stead, who was one of my constituents, and the other people who were killed in his Hercules—partly because it did not have the proper suppressant foam—the Ministry of Defence will be represented by a senior barrister, but the Government will not allow the same luxury and afford the same courtesy to the families involved. Will the Minister assure the House that proper legal representation at inquests will be offered to families such as the family of Flight Lieutenant Stead?

Bob Ainsworth: This matter has been raised repeatedly by different people, and that is perfectly and utterly understandable. I am not going to commit to legal representation and legal aid for families at a coroner's inquest. The coroner's inquest is an inquisitorial, fact-finding process. It is not always appropriate that legal representation be provided. So, we are not going to provide legal representation at coroner's inquests, as a matter of course, in all circumstances.
	Let me tell the House what I am concerned about with regard to the system. We should make sure that we are as open as we can be with people and that we reduce the appalling length of time that people have to wait. Under the current system, we wind up with a military police investigation, which sometimes goes on for months or even years. In many instances, we do not even start a board of inquiry until after that investigation is finished. A coroner is not happy or prepared to start his inquest until after the board of inquiry has completed its work and has reported. Meanwhile, the families are waiting and waiting, not certain about what happened to their loved ones and unable to get closure. We need and want to do more on that, but I am not sure that providing legal aid in the coroner's environment is always the most appropriate thing.

Patrick Mercer: I hear what the Minister says, but the fact remains that my colleagues and I, and Labour Members, have been making exactly this point for the best part of three years. If this were my battalion and something were not being delivered that could be solved, I would want to know why. I would put the resources into it, until such time as—this is exactly the Minister's point—the families get closure to the ghastly process of mourning.

Bob Ainsworth: A long-standing methodology is being used. I share the hon. Gentleman's concern. We cannot continue to leave people waiting as long as we do. We must try to do all that we can, which means involving other Departments and coroners co-operating to try to shorten the process. It is not acceptable to keep people waiting years for such decisions. I will see what we can do to try to improve the situation.

Joan Humble: I welcome my right hon. Friend's comments about delays. I have a constituent who has been waiting three and a half years for an inquest into the death of his son. However, may I press my right hon. Friend a little more on financial support for families? If the families of those who die in prison cells and police stations find that the deaths of their loved ones are considered exceptional cases, will he look at the possibility of deaths in the armed forces being considered exceptional cases? In which circumstance, financial requirements for legal aid can be waived, so families do not have to spend their life savings in an attempt to be legally represented.

Bob Ainsworth: There are exceptional circumstances in which that may be appropriate. I am happy to talk to my hon. Friend outside the Chamber about how that works and in what circumstances it ought to be allowed. We have given additional resources to the Oxford coroner and the Wiltshire coroner. There are now additional facilities and we hope to see some reduction in the time that people are waiting. There is the system to be considered as well. The additional resources on their own are not going to buy the benefits that we need when it comes to the delay that we are imposing on people.

Bernard Jenkin: I would simply point out that these casualties result from operations. They should be regarded as an exceptional cost of operations, and, therefore, the care of the servicemen's families should come out of the Treasury reserve. We know the position that the Minister has been put in by the Treasury. He has been told that if he wants to fund coroners' inquests and representations, the money will have to come out of some other budget in his Department. That is not acceptable. I am quite prepared to stand here and say that we should spend more on defence in order to fulfil the military covenant.

Bob Ainsworth: The hon. Gentleman ought at least to recognise that there have been additional resources. However, resources on their own are not going to sort the problem out. We have to do something about the delays.

Mike Hancock: I think that the whole House shares that view and will support the Minister in anything that he can do to speed up the process. However, if the Government are not prepared to fund legal assistance for families, will they continue to fund legal assistance for MOD witnesses at coroners' inquests and will they themselves be represented by an expensive legal counsel?

Bob Ainsworth: There is not a blanket idea of never funding legal assistance for families, but, in the overwhelming majority of cases, the coroner investigates matters himself. If we want to put money into legal representation, in that fact-finding inquisitorial process, that is money that is coming from elsewhere. The hon. Gentleman needs to recognise that there is other support for families, which they appreciate, and which we need to make sure is appropriately delivered. We do not necessarily want to hand that over where that is not necessarily the right and proper priority.

Julian Lewis: If the families are expected to manage at inquests without legal representation, which is an arguable point of view, why are Ministry of Defence officials, with all their professionalism and expertise, allowed to have legal representation?

Bob Ainsworth: The coroner system is a benefit for all. There are occasions on which the MOD feels that it needs legal representation, and there are occasions on which we would consider, in exceptional circumstances, legal aid for families. However, introducing that across the piece would not be the appropriate route down which to travel.

Kevan Jones: Are not those who are calling for families to get legal assistance fundamentally misunderstanding the process in a coroner's court? Even if the families have legal representatives, they play no direct role. Would not the money be better spent on supporting the families who go along to coroners' courts, rather than putting it into the pockets of lawyers, who have no role whatsoever to play in the process?

Bob Ainsworth: My hon. Friend puts it better than I do. We must consider our priorities. The families must be our concern, but we have to ensure that we are looking after their genuine needs, rather than spending money on what should not be the top priority.
	Let me turn to veterans' health. Mental illnesses sometimes do not emerge until after individuals have left the armed forces. We recently launched the first of six pilots for a new community-based veterans' mental health service. Subject to satisfactory evaluation, the model will be rolled out widely across the country. We have increased by 45 per cent. the fees paid by the MOD for mental health care for eligible war pensioners at homes run by the charity Combat Stress to enhance the care offered.
	Let me talk about compensation for our armed personnel. The commitment that we make is for life. It starts with medical care and rehabilitation. If a person is unable to return to service, or to work, there is a pension for life, which is index linked and tax free. The one-off lump sum is not an alternative to that, but an addition to recognise the up-front costs that inevitably confront a person with injuries. As my hon. Friend the Member for North Durham (Mr. Jones) pointed out earlier, there was no up-front payment whatsoever when the Conservative party was in power.
	We announced last month that over the next six months we would be pulling work together across the whole of the Government through the Command Paper on service personnel strategy. It will give us in Defence and every other Government Department the opportunity to assess what we are doing, to check our priorities, and to ensure that we are all doing all that we can to support our service personnel.

Linda Gilroy: I am not sure whether my right hon. Friend intends to say anything about welfare support packages for the families of service personnel who are on deployment. The situation has been vastly improved through access to e-mail and the telephone. May I draw to his attention the circumstances of submariners' families? Given the way in which submarines are deployed, including the stealth aspect, families cannot keep in touch in the same manner. Will he consider the welfare of submariners' families and, especially, ensure that they can get together before deployment so that they can draw support from each other during the very long time for which submariners may be deployed and out of touch with their families?

Bob Ainsworth: The welfare of the families of people deployed is an important matter that will be examined by the Command Paper. We ought to look at whether we can do more for submariners as part of that process.
	The hon. Member for North Devon talked about the new wi-fi facility. He should recognise that there is an allocation of free telephone calls and free internet connection in theatre. He should also recognise, as most hon. Members do—especially those who understand the armed forces—that Afghanistan is not the easiest place for connectivity. Logistically, it is about the most difficult place to run operations. We made a new commitment to wi-fi, but we never said that we could bring it in immediately or by the end of the year. We are looking to bring in this new additional commitment, and we will do so as soon as we are able.

Graham Stuart: Will the Minister give way?

Bob Ainsworth: I am not going to give way again—I have given way a lot.
	Through the service personnel Command Paper, we will look to see what more we can do across the whole of the Government to check our priorities and to ensure that we are supporting our armed forces appropriately. We will thereby ensure that we honour the spirit of the military covenant.

Andrew Murrison: I declare my interest as a medical officer in the Royal Naval Reserve. Our armed forces are second to none and we are all intensely proud of them. We should also salute the organisations that champion their cause.
	I congratulate the Liberal Democrats on using half their Opposition day to discuss the broken military covenant. The hon. Member for North Devon (Nick Harvey) used much of his speech to discuss the proposals that his party apparently launched at the weekend. I say "apparently" because the event appears to have passed the media by, which was possibly because there was little new or distinctive in what was said. However, heaven loves a sinner who is brought to repentance, so we must welcome the Liberal Democrats' new-found enthusiasm for defence and the hon. Gentleman's endorsement of many of the ideas that we have been pursuing for some time. Clearly, he has read the policy report that we published in July—and, judging by his document, much of which is eerily familiar, a lot more besides.
	Given that spirit of happy consensus, I hope that the hon. Gentleman will forgive me for saying how much I enjoyed something that I imagine will become a standard caveat on all Liberal Democrat spending commitments— [ Laughter. ] The Minister is giggling, so I suspect that he, like me, has read the document that the Liberal Democrats published at the weekend. On the second page, in very small print—I can barely read it—it says:
	"Some policy proposals published by the Liberal Democrats may imply modifications to existing government public expenditure priorities."
	I spent some time puzzling what that might mean. I think that it means "cuts elsewhere", yet, try as I might, I could not find anything in the hon. Gentleman's speech that shed any light on precisely what those cuts would be.
	The document goes on to say:
	"The Liberal Democrats recognise that it may not be possible to achieve all these proposals in the lifetime of one Parliament."
	In the hypothetical case that we have a Liberal Democrat Government following the next election—perhaps in May 2010—that could mean seven and a half years hence. I am not quite sure which soldiers, sailors and airmen the hon. Gentleman is talking to, but those to whom I talk say that the covenant needs fixing now, not in seven and a half years' time.

Nick Harvey: One has to admire the hon. Gentleman's gall. When his party is put under pressure by the Minister, the hon. Member for New Forest, East (Dr. Lewis) says at the Dispatch Box that the Conservatives have absolutely no answers to the funding questions, but that they will let the Minister know when the general election comes. It is thus quite extraordinary for his colleague, the hon. Member for Westbury (Dr. Murrison), to level exactly the same charge at the Liberal Democrats.
	The Minister pointed the finger at the Liberal Democrats and said that we would intend to pay for this out of savings to the procurement budget. He correctly identified where that would be. We have said that we do not see why we would need both the third tranche of Eurofighter and the joint strike fighter—it needs to be one or the other.

Andrew Murrison: I refer the hon. Gentleman to the answer that my hon. Friend the Member for New Forest, East (Dr. Lewis) gave earlier. I notice that the hon. Gentleman has not shed any light on where the cuts implied by the statement will fall.
	I have been studying the Liberal Democrat election manifesto closely, as well as the contribution that the party has made to defence debates recently. Others might say that that is a pretty sad thing to do, but as many hon. Members would point out, time spent on reconnaissance is rarely wasted. The manifesto effectively contains just one paragraph on defence. The rest of any reference to defence-related issues has to do with the arms trade.
	The poor attendance by Liberal Democrats at defence debates in Opposition and Government time is borne out by the official record, notably on 16 October, an occasion that was distinctly Liberal Democrat-lite.
	The Liberal Democrats say that they want to set up what they call "a military covenant committee". They go on to explain, in a breezy sort of way:
	"Such a committee could perhaps be established in the House of Lords."
	We learn that
	"As a cross-party body, it would be well-placed to provide credible recommendations drawing on the expertise and experience of its members."
	That sounds to me like a job specification for Lords Guthrie, Boyce, Craig, Bramall and Inge. Ministers are, I hope, still smarting from the broadside that the noble and gallant Lords delivered in the other place on 22 November. I would not expect the Government to welcome such a plan, but for different reasons entirely, neither would I.
	Generals are very fine people. Many of them are my constituents. But where would the views, experiences and insights of squaddies and their families be articulated in such a lordly committee of the top brass? Although I do not doubt the hon. Gentleman's good intentions, he needs to go back to the drawing board.

Bob Ainsworth: Surely it might be better to give retired generals a committee so that they do not have to do the foreword for a "Way Forward" paper.

Andrew Murrison: I am not sure what the right hon. Gentleman is referring to. If he has not already read the document that was published at the weekend, I suggest he does. There are more committees in the document than one can shake a hairy stick at.
	The military covenant appears to have taken form relatively recently, when it popped up in an Army book of reference, perhaps influenced by the more overt expression by our allies of their special debt to their armed forces, notably the US. I suspect that it was scripted by an Army staff officer, who thought it was a good idea at the time. There is nothing wrong with that. We should adopt it and work on it. I hope that we now understand that the military covenant is not simply the bailiwick of the Army, but that it extends in common usage right across our armed forces.
	The Secretary of State's prior appointment is a perfectly good reason for being absent today. I am grateful to him for explaining yesterday the circumstances that take him away from the House today.
	We learned from General Lord Guthrie about the Prime Minister's disinterest in defence as Chancellor, which he appears to have carried over into his new job, obliging photo calls in hot, sandy places notwithstanding. The Prime Minister must do the decent thing by our armed forces and ensure that the person whom he appoints as captain of the ship is able to devote his attention full-time to his vital defence duties. None of our troops in action, regulars or reserves, are part-timers. Why is their boss?

Bob Ainsworth: I hope the hon. Gentleman will make it clear that the Secretary of State is not present because he is on important business meeting bereaved families.

Andrew Murrison: I am grateful to the Minister. I thought I had done that, in what I hope he will accept was an acknowledgment of the validity of the Secretary of State's absence from the House today.
	The leaked 2007 Chief of the General Staff's briefing team report told us:
	"The tank of goodwill now runs on vapour; many experienced staff are talking of leaving."
	It is backed up by this summer's continuous attitudes survey, which revealed that many of our crucial middle-ranking people were considering leaving over the next six months. The most recent set of Defence Analytical Services Agency figures published in November show that that was no idle threat, as 1,344 Army officers have indeed left in the past six months alone. That is twice the number for the year before, and three times that for 2004-05. The common factor appears to be the consequences of overstretch, with harmony guidelines being routinely breached.
	The Under-Secretary of State and I on Monday, at an all-party group meeting on mental illness in servicemen, learned how important time between tours was for the mental health of our troops. Overstretch and the habitual breaching of harmony guidelines is undoubtedly making some of our people ill. I expect the Minister is as surprised as I am that none of our Liberal Democrat colleagues was at that meeting, particularly given their professed interest in the welfare of servicemen and the reference in their motion to mental health.
	Had the Liberal Democrats been there, they would have learned about community mental health pilots and perhaps shared my concern at the apparent desire of the Service Personnel and Veterans Agency further to reduce its exposure to the health care of veterans by shifting responsibility to our NHS, which with the best will in the world has struggled in identifying and prioritising the health care needs of members of a small and shrinking defence community.

Willie Rennie: Those rather cheap remarks about attendance or not at meetings that the hon. Gentleman happens to attend are inappropriate. I have met a number of mental health charities on a number of occasions, including with the Defence Committee. He should check his facts before he makes such comments in the Chamber.

Andrew Murrison: I am grateful to the hon. Gentleman for putting that on the record, but I did not see him at the meeting on Monday. He would have benefited greatly from it.
	My hon. Friend the Member for Woodspring (Dr. Fox) and I are familiar with Selly Oak and supportive of it. It is clearly right that our injured personnel are treated with the very best that our NHS can offer in an appropriate tertiary care centre. However, we continue to receive reports—I received one only a few minutes ago—of badly injured people still being nursed on mixed general wards. I seek the Minister's assurance that he is doing everything he can to ensure that the military managed ward is of sufficient capacity to accommodate our injured service personnel.
	The Chief of the General Staff's leaked briefing tells us, on the subject of accommodation:
	"Estates are becoming less safe and more run down".
	Those of us who have the honour and privilege of representing garrison towns will know that from our casework. Both as an MP and, before that, as a medical practitioner, I have been truly appalled by the service accommodation in my constituency. The commanding officer of 3 Para, Lieutenant Colonel Stuart Tootal DSO, cited the abysmal state of soldiers' housing as one of the reasons for his resignation last month.
	Ten years after it came to power, the Labour party still likes to blame long-term under-investment, but bed spaces that were acceptable a decade ago will have deteriorated massively in the interim, while expectations have risen in parallel with those of the general population. It is surely right that in the 21st century our young men and women should not have to endure a degree of squalor in many cases that would have a college hall of residence condemned. Yet in 2006-07 £13.5 million was sliced from the five regional prime contractors, putting basic maintenance on hold.
	At the same time we have seen £2.3 billion spent on filling MOD main building with more marble, gilt and wood panelling than Saddam enjoyed in his Basra palace, as those of us who are familiar with that building will attest. We find more poor prioritising in the resurfacing of tennis courts and the construction of sports pitches, priorities that now seem questionable, in the view of the Public Accounts Committee and the MOD.

Kevan Jones: I agree, but when I raised in the House on 16 October the amount of money being spent on generals' accommodation, I was roundly condemned by most of the Conservative Back Benchers.

Andrew Murrison: I think the hon. Gentleman is mistaken. As I understand it, the tennis courts in question were run for the benefit of the Royal Military Police.

David Davies: I am grateful to my hon. Friend for giving way during an excellent speech. Does he share my concern that while budgets for soldiers' accommodation are being cut, the Ministry of Defence was able to find several hundred thousand pounds for works of modern art? A spokesman at the time said, "Well, you can't expect us to hang up pictures of dead admirals." Presumably he was referring to war heroes of previous generations, whom the MOD now seems to think are not fit to adorn its walls.

Andrew Murrison: As ever, my hon. Friend has made a good point. The Government have at their disposal any amount of fine artwork, and it seems a pity that they have invested public funds in that way.
	Nothing is more important to morale than pay and food, yet the joint personnel administration system has managed to churn out 55,000 cases of underpayment from January to September. We learn that this Christmas, soldiers have become dependent on the charity of regimental associations to tide them over. Where does the Minister think that fits in a military covenant that he maintains is not broken?
	The Chief of the General Staff's briefing team's leaked report pops up again to criticise strongly the new way of charging people for food. Ministers know it as "pay as you dine", but soldiers call it "save as you starve". CGS staff believe that it is bringing a Pot Noodle and sandwich culture and say that they have even seen soldiers cooking ration packs over gas burners in their rooms. That is not a good situation to be in. Little wonder that soldiers are cynical; what was sold to them as a ritzy new line of restaurants and exciting eating opportunities has turned out to mean little more than the introduction of a till.
	We have expressed our concern at the armed forces compensation scheme and I know that the Minister is reviewing its application. I await the outcome with great interest, but I am not convinced that the deal that our wounded soldiers get reflects the enormous debt that we owe them. Even with the guaranteed income payment, to which the Minister referred, it seems that many of our young men and women face a frugal existence that contrasts, I am afraid, with the financial outcomes for people with relatively minor occupational injuries.
	Meanwhile, the PAX life insurance and compensation scheme, pushed by the MOD, intends to bump up premiums by at least 30 per cent. to mitigate the losses incurred through the current level of combat injury and death.

Kevan Jones: Will the hon. Gentleman give way?

Andrew Murrison: I shall give way to the hon. Gentleman when I have made a bit of progress; I have already given way to him once.

Graham Stuart: Once too often.

Andrew Murrison: Once too often, as my hon. Friend says.
	I have an interest in coroners' inquests because the Wiltshire coroner is basing his work at the old Trowbridge town hall in my constituency. I have spoken to the coroner, Mr. David Masters, about these issues. I hope that the Minister will agree with the Prime Minister that having 122 inquests outstanding from Iraq and Afghanistan is unacceptable. I hope that he will be able to say what he will do to relieve what I regard as the avoidable stress being caused to bereaved families. Surely our military covenant should cover them.
	Other Members have mentioned the issue of legal support for bereaved families. If the MOD feels it necessary to be represented at the inquests, it is surely right that families should be represented as well. I entirely endorse the remarks of the hon. Member for Blackpool, North and Fleetwood (Mrs. Humble) and others, who have asserted that the circumstances are exceptional.
	Those of us with children know what a preoccupation education becomes; we worry far more about our children's education than we ever did about our own. The Liberal Democrat motion fails to mention families explicitly or education at all; those are serious omissions. However, this summer's continuous attitude survey for Army members, whose children find themselves particularly exposed to turbulence, reveals that half the families feel that Army life is having a negative or very negative effect on their children's schooling.
	Research by Wiltshire local education authority, which is very much at the forefront of the issue, reveals that children from forces families perform worse in all subjects—particularly maths, interestingly—at all levels than their civilian-family neighbours. In Warminster in my constituency, 59 per cent. and 50 per cent. of pupils at the Avenue school and the nearby New Close primary school respectively come from service families. In Wiltshire overall, the figure can go up to 80 per cent. in some primary schools. That picture is repeated across the country in areas where there is a large military presence.
	The problem is the turbulence that is caused and the other special factors that act as cost drivers in schools with a high proportion of service children. The children involved are great kids who deserve the very best, but they are handicapped by a funding formula that ignores their needs and the results of turbulence in particular. Such children are invisible in the pupil level annual school census; if they join and leave during the school year, it is as though they never existed for the purposes of the funding that their LEA gets. What effect does the Minister think that has on school finances? Is it any wonder that service children's results are so relatively disappointing?

David Hamilton: Does the hon. Gentleman not agree that improving housing standards is of key importance if our servicemen are to remain in the Army and not worry about their families? As we improve the house building programmes, education will also be improved, as families would rather stay in good accommodation. They would be more stable and that would assist family outcomes.

Andrew Murrison: I am sure that there is an element of truth in what the hon. Gentleman has said.
	October 2 was a day of significant speeches from sandy places. In a reversal of what presumably was intended, the Prime Minister's Iraq address was completely eclipsed by the barnstorming speech of my right hon. Friend the Member for Witney (Mr. Cameron) in Blackpool. Back in October, Christmas seemed such a long time away, but it did not seem so for service families. The Prime Minister said from his desert soapbox that 1,000 troops would be home for Christmas, but he failed to say that the pledge was backdated to June. In fact, since the beginning of September, the number of troops has fallen by just 120.
	As most of us here contemplate Christmas at home with our family and friends, is it any wonder that our troops feel let down by a Government whose first instinct is to spin, even at the expense of our men and women engaged in two major conflicts? Those conflicts were unforeseen by the planning assumptions of a now laughably out-of-date strategic defence review and financed only in part by a heavily caveated urgent operational requirement.
	I end on a slightly more conciliatory note. Four years after the publication of the well intentioned but largely ignored overarching personnel strategy, the Government's understandable focus on military hardware may well have unwittingly squeezed what used to be called the greatest single factor in Britain's armed forces—their people. The time may have come to reappraise the balance.

Madam Deputy Speaker: Order. I remind hon. Members that Mr. Speaker has imposed a limit of 10 minutes on Back-Bench speeches. Members may wish voluntarily to reduce their contributions further.

David Hamilton: I shall be brief; I have asked a number of questions and spoke in the last debate on these issues. I feel very strongly about how we deal with the families of our armed forces, and I shall concentrate on that point.
	As I said last time, when people from my area left school many years ago in 1965, they went to the pits or the mills or they joined the Army—we had Glencorse barracks, which were referred to earlier. What surprises me and is very important is that we must move forward at a time of high expectations. The expectations of people leaving school are now much higher than many years ago. The days of dormitories are over; if we want to attract the best people into the armed forces, we must provide proper accommodation to go with that for when they are back home.
	We must ensure overall that families are well looked after. That is the biggest single issue that I find with members of the armed forces whom I meet—it is about the families. When our lads and lassies are at the front in Afghanistan or Iraq, all they are worried about is how their families are getting on back home. That is why—I say this to the hon. Member for Westbury (Dr. Murrison)—I emphasise the point about education and homes. As we develop a programme to make things much more stable so that people can choose to stay in their homes instead of moving to Germany, that will mean much more stability not only in the home, but for the children who attend school. In my constituency, a substantial number of children from Glencorse barracks attend the local primary school.
	While I was with the Defence Committee in Germany, I realised for the first time—one always learns from practical experience—that children need to be together. When children are moved into Army barracks, the education authority considers moving them to the nearest primary schools, so that they are spread out into different ones. My experience in Germany showed me that the best thing to do is to put all the children in the same school, because if any disaster befell a family it was amazing how that reflected itself all the way down through the families of the armed forces to affect the children, who depended on each other. I spoke to people at a local primary school a few months ago, and it was amazing how the young kids who were based in Germany and Cyprus before coming back to Britain had gelled. That was good to see. Because of the housing that is available to mothers and fathers, many of them have chosen and will choose to remain where they are in the long term instead of moving about as they have hitherto.
	I congratulate the Government on the long-term house-building programme. It is brilliant to find that we now have single people's accommodation with a television and a single bed and no other person in the room. It is very good for them to have that facility in some of the new build that has taken place. However, there will be a practical problem throughout the UK in trying to get workers for some of the schemes that are under way. In many areas, those workers will not be found. It is difficult in my area, where prices have rocketed and are three times what they used to be; that is why we are having to bring people over from the eastern countries to do the work. In appropriate areas, joint ventures between social housing organisations, local authorities and the MOD might be the way forward. I am glad that the Minister has agreed to meet me to discuss that.
	We must recognise the amount of money that is going into the developments that are taking place. The Government have undertaken to ensure that when people leave the Army they are on an equal footing when they go on to the housing list. I genuinely hope that they, and all Opposition parties, will take a different view. In Midlothian, armed forces personnel get priority so that when they leave the armed forces they go to No. 1 on the housing list. I have never once received a complaint from any member of the public about that position. If we are truly going to recognise the role of the armed forces, perhaps the leading lights from the three main parties can agree on one thing.

Colin Breed: I recently raised that issue with my district council, because unfortunately armed forces do not get priority locally. I entirely agree that there would be no public concern whatsoever, and it would be a real fulfilment of the covenant to do that and to make it absolute policy throughout the country.

David Hamilton: I thank the hon. Gentleman for that contribution. I agree, Madam Deputy Speaker—I mean Mr. Deputy Speaker; that was a good changeover—that that is very important. An understanding that local authorities recognise such matters would send an important message to our armed forces as they come out of the service and are trying to get back on to the housing list.
	I notice that, once again, no Scottish National party Members are in the Chamber to discuss this issue. It is important to recognise that several issues that are faced by the Government in relation to education, health and so on do not apply in Scotland, which is a separate case. When kids from a Scottish regiment come back from abroad, they come back not to an English education, but to a Scottish education, and that must be recognised. When the Defence Committee took evidence in Scotland, I was truly ashamed by the ignorance of officials in the Scotland Office who did not understand the questions that we were asking. We stated that view in our report—it was an outrage. I ask the Minister, when he talks about how we develop programmes throughout the UK, to remember that Scotland, Wales and Northern Ireland are in many cases different. Although 87 per cent. of the UK's population is in England, a disproportionate number of those in Scotland, Wales and Northern Ireland are in the armed forces, and let us ensure that we deal with everybody as part of the UK.

Mike Hancock: The transition from Madam Deputy Speaker to yourself, Mr. Deputy Speaker, was a stealthy operation—it would have done the SAS great credit to slip in so unseen.
	I am delighted to follow the hon. Member for Midlothian (Mr. Hamilton), because his intervention on the Conservative spokesman was very relevant and the response that he got was less than generous. The hon. Gentleman's point was that the changes that the Army, in particular, has brought about were geared around the lifestyle of families to ensure that children and housing became a much more stable commodity for service families, and it is wrong for anyone not to give credit for those changes. I am sure that five years from now there will be a distinct difference for service families in how education, in particular, operates.
	As the longest-serving member of the Defence Committee, our recent session— [ Interruption. ] I remind Labour colleagues that at recent meetings Opposition members were in the majority, because despite their huge numbers on the Committee, so many of them were absent. Over those 10 years, I have listened to lots of evidence sessions, but the best one by a long way and for a long time was that on Defence Medical Services, which was attended by the Under-Secretary and the two leading Army medics—the one in charge of medical services and the surgeon general—with the NHS represented by a Health Minister. That showed a positive and open-minded approach to the issues that servicemen and their families were facing. It was a real pleasure for once to hear two generals who were committed to the issue before them, were not afraid to say somewhat controversial things, and willing when they did not have the answer to admit as much. I am like the former defence Minister, the right hon. Member for Islwyn (Mr. Touhig), who said that he could not recollect former chiefs who reported to him raising these matters when they were in office. One wonders how much credibility there really is among those people in the other place who continually make these comments when they are out of service but did little or nothing at the time. Mike Jackson gave evidence to the Defence Committee many times about the morale of the Army, and I cannot remember one occasion when he said that one of the key issues is junior ranks' accommodation or, for that matter, service accommodation generally.
	I would much rather listen to someone who, at the age of 42, having led 3rd Battalion the Parachute Regiment in Afghanistan, resigned from the Army and clearly stated the reasons. I hope that the Minister for the Armed Forces will look carefully at the points that that colonel raised in his resignation letter. That is a man who has had the job of commanding a unit and has had to face what the hon. Member for Newark (Patrick Mercer) had to face in commanding soldiers in the Balkans—dealing with the daily issues that soldiers face and the pressure that they are under on the front line. It is not about their own safety and what is affecting them, but about what is going on at home. That is why so many Members, including the hon. Member for Plymouth, Sutton (Linda Gilroy), intervened about the family welfare packages that are available. It is essential that we get that right and that we have a duty of care not only to service personnel but to the service family in its entirety.
	We need to look carefully at the issue of inquests. I enthusiastically support what was said in the statement about greater resources; every single Member here who has been close to such processes for any period welcomed that intervention and that new money. Coroners will be allowed to be more flexible about where the hearings take place.
	I return to the point, however, of legal representation. With regard to families not having legal representation automatically, we should not forget that that would be a matter not just of the MOD paying, but of people having access to legal aid. It would not fall on the MOD if the legal aid regulations were worded to the effect that the circumstances of a death could be treated in a certain way if they were sufficiently extraordinary—in the same way as they would if someone died in police custody or in prison. I cannot understand why we cannot overcome this problem. The cost would not fall on the defence budget, and the matter has to be seriously considered. The Prime Minister, in one of the interventions that he took on his statement this afternoon, said that he would look at it. We need to look at a change to the legal aid regulations, which would allow further change to happen.
	The hon. Member for Westbury (Dr. Murrison) talked about a lack of mention of welfare, families or education in our motion. Remarkably, there is no mention of education in the Conservatives' amendment to it. I wonder whether, just as in respect of the previous intervention he took, when he suggested that he did not quite know what we were talking about, he had not read his own amendment.

Bob Russell: He signed it.

Mike Hancock: Despite the fact that the hon. Member for Westbury signed the amendment, I am sure that he would not have been the first Front-Bench spokesman who had signed something without reading it. Our motion certainly talks about the overall package of welfare, and it would have to be a pretty mean-spirited person who did not recognise that that, in its entirety, meant the welfare package for service personnel: housing, education, health—the whole gamut.
	On the question of housing, I represent an area where there is a high proportion of service housing, and I am a little mystified about where the 140 unfit houses are located. I cannot believe that they are all in Portsmouth. If there are only 140 unfit houses in the MOD estate, I cannot believe that they are all located in and around the Portsmouth area. That figures needs to be considered with a great deal of caution; I suggest that we look at it further. We must be renting more than 140 houses in the private sector because there is not suitable accommodation for service families in Portsmouth. I know for a fact that we are doing so. It is interesting that the current Chairman of the Select Committee on Defence continually tells us that it was his last task as a Minister at the MOD to sell off the housing estate. I am sorry that he is not with us this afternoon, because he would have another chance to justify that awful decision.
	The only winner in that disposal was Annington Homes. It is clear that the disposal of surplus assets has made up nearly half, if not all, of the price it paid the MOD for the initial acquisition. I am at a loss to understand why the MOD is building houses at the same time as Annington is selling them. I have yet to understand how that equation works out to the benefit of the nation. We sell off our service homes and say that we will rent them back. We allow some of them to fall into disrepair. They are no longer used by service personnel because they are not fit to live in, and Annington then gets the privilege of selling them off. At the same time, the MOD is spending hundreds if not millions of pounds in the greater Portsmouth area alone to replace housing.
	Let us get it right on housing. I admire what the Government have done about single person's accommodation for junior ranks in the Portsmouth area. That has greatly improved, but there is still a long way to go. Based on the estimate given to the Defence Committee five years ago, it will take 20 years to bring all single service accommodation up to standard. In Aldershot, we were renting four-bedroom houses so that six Paras could live in them because the accommodation available was inadequate and shameful. One of the reasons that they moved to Colchester—apart from the fact that Essex has some attractions and that they would have the hon. Member for Colchester (Bob Russell) representing them—was the appalling state of the single-service accommodation in Aldershot, which was demolished as soon as they moved out. It certainly was not the football that attracted them.
	I welcome the debate today, and I think that there is a general accord. I do not believe that the military covenant is being broken, but I agree with those who have said that it needs to be cherished and that it is in need of greater care. Resources have to be prioritised, and we have to be honest and fair. In a perfect world, everything would be in place, but we do not live in that world. We have to accept that major steps have been taken by this Government to bring about improvements—I think that this view is shared and supported by the whole House—but that is not to say that an awful lot still does not have to be done.

Gordon Marsden: It is a privilege to speak in the debate this afternoon, and a privilege indeed to follow the hon. Member for Portsmouth, South (Mr. Hancock), who always speaks on these matters with authority and fairness.
	I want to touch this afternoon on how the issues in question affect me as a constituency MP, and about the role that various organisations play in relation to them. It is instructive that the Government amendment talks about
	"the role played by ex-service organisations and other charities in contributing to...support".
	I should like to spend a little time talking about that role, and about the key role played by individuals. Over the years, along with other towns in Lancashire, Blackpool has contributed more than its fair share of servicemen to difficult spots. When I first came to this House, one of the things that first drew me into contact with veterans' organisations was the campaign for compensation for far east prisoners of war. That compensation was achieved under this Government after more than 40 years of failing to do so.
	I strongly welcome what the Royal British Legion has done by introducing its campaign. It has focused minds throughout the House on the various issues, and the organisation has been commendably fair minded in the way it has pursued them. That is one of the reasons I sat down with my local Royal British Legion association to talk about some of the key issues that have been raised with it, and I want to touch on them a little later.
	We have, quite rightly, heard a lot about the practical nuts and bolts of service conditions today. In speaking in the debate, I am acutely conscious that I am a civilian. Like the majority of people in this House, I have never served in the armed forces. I did have the privilege, however, of editing the magazine  History Today for 12 years, and in that context I dealt with and met many historians and the actual veterans whose service we are considering. Honouring our servicemen is not just about honouring them through practical conditions, but honouring them through remembrance of their service and their achievements. The recognition of those achievements is extremely important; it has a practical consequence, and links into their needs today.
	Both my parents served in the armed forces during the war, and I am sure that many people here had parents who served. They are literally the generation to whom we owe everything. It is important that their needs should be addressed now, while many of them are in their '70s and '80s. That is why I was pleased when, under this Government, the service of the Arctic convoy veterans was recognised—the Russian convoy club in Blackpool and many of my constituents had brought the matter to my attention. Under this Government, we have had recognition of the Suez canal veterans, the Bevin boys and the Land Army girls. Those are intangible things, but important nevertheless.

David Davies: Will the hon. Gentleman give way?

Gordon Marsden: I will not give way because of the time constraints, and to allow other colleagues to get in. I am sorry.
	We need to look at practical things today. When I sat down with my British Legion colleagues in Blackpool, they were particularly keen to talk to me about three main issues: mental health care, support for families at inquests, and general priority treatment for veterans; all of those are important issues. I might add in passing that the British Legion in Blackpool has played a tremendous role not just in supporting veterans, but in fundraising. Because of the nature of Blackpool as a leisure and tourism town, the British Legion organisation there has raised £100,000 over the past 18 years through its annual Poppython, which is a 10-hour entertainment extravaganza that raises money in the weeks before Remembrance day. I want to put on record my tribute to its president, Ian Coleman, and to the many members of the organisation who work very hard for it.
	Many Lancashire servicemen were taken prisoner while fighting in campaigns in Singapore and elsewhere. Every year, the Burma Star Association holds its reunion in the Winter Gardens, and my hon. Friend the Member for Blackpool, North and Fleetwood (Mrs. Humble) and I have been privileged to attend those reunions over the past 10 years. Behind that organisation, one man, Jack Nield—who, sadly, died last month—had been a tireless worker for the welfare of the Burma Star veterans over the past 20 years. Those are some of the individual stories behind the organisational ones.
	I want to discuss how we should honour all these people today, and how we can take these issues forward. We have talked about priority NHS treatment for veterans. Many veterans are not aware of that entitlement; indeed, many primary care trusts do not know about it either. That is why I have written to the chief executives of all my local trusts, including the Lancashire Care NHS Trust, to ask whether they have protocols for this, and whether veterans are receiving the priority treatment to which they are entitled. We must also remember that veterans suffer from a wide range of conditions, many of which might not emerge until 30 or 40 years after their active service.
	The survival rate issue produces particular challenges in regard to treatment. One of the members of my local British Legion committee said that some of the people on active service in Afghanistan or Iraq would not have survived 20 or 30 years ago. That is absolutely true, and we have heard testament today to the work being done in that respect. We need to support the people involved as much as possible through the process, and I welcome the investment that is going into Selly Oak and to Headley Court, but may I make a plea to the Minister to consider what more can be done to provide support and accommodation for families who have to be there with their loved ones over a long period of time?
	One of the most moving things that any Member has to do every year is to attend Remembrance day services and, in many cases, to lay wreaths in memory of the servicemen who have lost their lives. These issues have come so much more to the fore in recent years not only because of the media coverage of historical anniversaries but because we are acutely conscious of the sacrifices made in more recent conflicts, such as the Falklands, Afghanistan and Iraq. Last year, I laid my wreath at the Blackpool war memorial, following the parents of Gunner Lee Thornton, who was killed while on active service in Iraq. His parents are still awaiting his inquest, and I have written to the Blackpool and Fylde coroner on their behalf to ask what we can do to speed up the process. I welcome the Government's proposals on centres of excellence, but may I again make a plea to my hon. Friend the Minister to take whatever action he can on this issue now?
	The Veterans Agency—which is based just outside my constituency, in that of my hon. Friend the Member for Blackpool, North and Fleetwood—does an excellent job, but many claims are still disputed. The Government should not be afraid to put right old anomalies. In that regard, I want to make particular reference to the treatment of merchant marine servicemen, which has not always been on a par with that provided to the other services. In fact, just before his death, Jack Nield, to whom I referred earlier, sent me some casework on that issue, which I shall take up with Viscount Slim, the president of the Burma Star Association.
	Every year, at the Blackpool cenotaph, Jack Nield used to deliver the famous Kohima epitaph:
	"When you go home
	Tell them of us and say
	For your tomorrow
	We gave our today"
	Our servicemen are still giving their tomorrows in Afghanistan and Iraq, and their families are having to bear the pain and suffering. Let us ensure that everything that we do to support them and to honour the covenant matches that sacrifice.

Keith Simpson: It is a great pleasure to follow the hon. Member for Blackpool, South (Mr. Marsden) and to echo his sentiments. He was a distinguished editor of  History Today.
	I should like to look at a different aspect of the military covenant that I think parliamentary colleagues will regard as crucial, even if they disagree with some of my interpretations. It is the breakdown of the military covenant between Ministers and senior officers. I declare an interest in that I taught military history to service personnel for many years. I also did two and a half years as a special adviser in the Ministry of Defence. I have therefore seen these issues from both sides.
	I think we all agree, although we might place our emphasis in different areas, that public disquiet is increasingly being expressed not only by regiments of retired officers—to whom some serving officers refer as "the dead Army"—but by serving officers themselves. I am thinking particularly of the comments made by General Sir Richard Dannatt and the perhaps more discreet comments from Air Marshall Stirrup, the present Chief of the Defence Staff, about a range of issues that have also been mentioned today.
	There is nothing new about tensions between politicians and senior officers. It comes down to personalities, politics, budgets, resources and, of course, policies. Our history is littered with robust individuals in the military, including Nelson and Wellington, and Roberts and Wolsey in the late 19th century. Relations between politicians and the military during the first world war were often appalling—between Lloyd George and Haig, for example. There was also a robust relationship between Churchill and senior officers in the second world war. People such as Mountbatten and "Shan" Hackett also spring to mind. There have been faults on both sides.
	I suggest, however, that it is unusual to have had such an outpouring of feeling not only from retired officers—to have all the former Chiefs of the Defence Staff speaking as one is quite unusual—but from serving officers. We should accept the fact that, although most military personnel have a deep interest in political issues and will argue strongly not only about military matters but about matters that concern them as ordinary voters, including the environment, the police and that kind of thing, they tend to have a pretty low opinion of politicians. I suspect that we come just above child molesters and journalists in their rating system.
	When the former Chiefs of the Defence Staff spoke out, the hon. Member for Sunderland, South (Mr. Mullin) suggested that they were all part of a Tory plot. I do not think that that is the case at all. I suspect that many of them have never voted Conservative; some might not vote at all. The fact is that these serving and retired military men believe that the stresses and strains that the armed forces have been under for the past two or three years are unprecedented. The fact that Richard Dannatt, who is normally a most cautious and discreet man, spoke publicly strikes me as significant.
	I believe that the military covenant is in danger of breaking down because the chain of command itself is under such enormous pressure. Many middle-ranking and senior officers believe that their men and women—and, more importantly, their families—do not believe that the chiefs of staff are accurately and forcefully representing their concerns to Ministers; hence they feel forced to speak out. Anyone familiar with the array of military blogs will know the reactions of servicemen and women to this matter.
	One of the problems that the Government face is that their strategic defence review in 1998—which was warmly welcomed by the military establishment, which participated fully in it—was, sadly, never properly funded. Indeed, the man who drove it through, Admiral Essenheim, ended up retiring early from the Navy in disgust.
	For decades, as we all know, the military appear to the Treasury to have cried wolf on resources. On so many occasions—be it the Falklands, the Gulf war, Kosovo, Sierra Leone, Iraq or Afghanistan—they have said before those conflicts, "We have insufficient resources." Invariably, they deliver. Why? At the end of the day, they do so because they cannibalise their resources; because, as former Prime Minister Blair knew, they have a can-do mentality; and, more recently, because we have been borrowers from the Americans. Without being able literally to borrow kit in Afghanistan, the armed forces would not be able to operate.
	The military fear that eventually the armed forces will be irreparably damaged if this current tempo continues, and that there will be, in the words of General the Lord Guthrie, some degree of "operational failure". What is the attitude of Ministers to this? I do not accept the criticism of some colleagues that the problem is that none of the defence Ministers has any military experience. That is the norm and is likely to be the future norm, and it does not mean that they cannot perform their functions properly. After all, one does not have to be a train driver to be Secretary of State for Transport, or to be a teacher to be Education Secretary. What those in the professions that operate within those Ministries look for is Ministers who are competent and forceful and can explain the case and, where necessary, take responsibility for failures and inadequacies that they are ultimately responsible for. I am afraid to say that one of the Government's problems is that the Prime Minister has a reputation, unlike his predecessor, for not being particularly interested in defence. He has almost a Gladstonian attitude to defence, and it has not been helped by spinning.
	Many comments have been made about the fact that the current Secretary of State is double-hatted. I do not cast any aspersions on his hard work—he is a very committed man and I suspect that privately, he is deeply embarrassed about being double-hatted. However, the message that that sends to the servicemen and their families is entirely negative. It does not matter if he is doing only one hour a week on that other job; what matters is the perception, as much as anything else. That has contributed in part to what I believe is the erosion of the military covenant.
	The crucial element missing from any debate about the military covenant and relations between Ministers and the military is the role of the policy-making civil servants, who are absolutely crucial. In my day at the MOD, they were quite formidable. Sir Michael Quinlan, the permanent under-secretary, was a man who made the Chief of the Defence Staff automatically put an exercise book down the back of his trousers and my noble Friend Lord King start hiccupping nervously. He was a formidable man. I am not sure whether the policy-making civil servants of today are of the same calibre, but they are crucial in developing many policy areas and in maintaining the military covenant. We need to look more carefully at their role.
	If the House at least accepts my contention that there are problems—even if they do not accept that there is a breakdown of the military covenant—how do we repair them? First, Ministers just have to try harder and not spin. They have the responsibility of repairing mutual confidence. Equally, the military should not leak. They should not go to the media because if they do, why should their ordinary soldiers, sailors and airmen not do the same thing if they happen to disagree with the operational orders of a senior officer? This is going to depend on robust personal relationships. I see nothing wrong in the fact that there will be robust discussions between the military and Ministers.
	Finally, we need to look at the whole question of our national security strategy and institutions. If we do not get this right, we will have future conflicts in which the relationship will break down completely, and we will revert to a position in which politicians and the military have mutual antipathy, as they did during the first world war, when the military were referred to as "brass hats" and civilians were referred to as "frocks" because of their frock-coats. We need to get this right.

Eric Joyce: I am aware of the time, Mr. Deputy Speaker, so I shall be as brief as I can be. It is a privilege and a pleasure to follow the hon. Member for Mid-Norfolk (Mr. Simpson), who made a characteristically excellent speech, although I disagreed with some of his points. I will not deconstruct his speech, but I agreed with much of what he said. The Conservative Front-Bench spokesman, the hon. Member for Westbury (Dr. Murrison), introduced himself as, effectively, a serving officer. I remember the hon. Member for Mid-Norfolk sticking it to me in an Adjournment debate regarding what I did before I was a Member here, albeit in a slightly different context. Nevertheless, things have moved on and it seems to be much more the norm for officers—on the other side of the House, uniquely—to get operational experience and to come back here and make their recent expertise known in the House. That is no bad thing and it adds to the mix in a useful and important way.

Andrew Murrison: I was simply bringing the House's attention to my entry in the Register of Members' Interests. I am sure that the hon. Gentleman would be the first to criticise me had I not done so.

Eric Joyce: It is not my intention to criticise; my point is that it is pretty much the norm for Members to go on some kind of operations, and to come back to the House and give it the benefit of their expertise. That change has occurred in the past five or 10 years, and it has certainly occurred in the relatively short time that I have been here. That is a good thing, but it flags up the complicated nature of the relationship between people who have served, those who are serving—be they members of the Territorial Army or of the reserve forces—and those who are on half pay. I might be wrong, but I think that some former Chiefs of the Defence Staff are on half pay, rather than being retired officers in the other House. I want later to address a few aspects of the behaviour of the former Chiefs of the Defence Staff.
	The hon. Member for North Devon (Nick Harvey) said at the beginning of his speech that the military covenant should be codified. We all know that, in a way, it is codified.  [ Interruption. ] Well, it is and it is not. The reality is that one cannot codify a relationship between society and service personnel. The fundamental thing about the military covenant is that it is exactly that—a relationship involving society as whole. My right hon. Friend the Minister for the Armed Forces rightly pointed out how important it is that we have a meaningful and proper debate about the resources that we spend on defence and how we spend them.
	The accommodation situation is still a disgrace. I have no idea how we as a nation, regardless of which party is in power, have allowed military accommodation to reach a point where, frankly, it is not good enough. The Government are doing what they can. They have put in £5 billion—we have all heard the figures, which have been mentioned many times—and they are doing many things that will benefit serving personnel. A future Conservative Government might well do something similar—I have no idea—but I notice that when the Conservatives tell us that we should spend more than the uplift we are already spending, they never add to that a spending commitment. That has to devalue to some degree what they say. When they come up with a spending commitment, they may have a stronger moral edge to their argument.
	I mentioned the hon. Member for North Devon simply because it is wrong to say that the covenant is akin to a legal contract—that it is almost like terms and conditions of service, or a document that lays down the relationship between a Government and their service personnel. Much of what we should be doing with the military covenant is about people's attitudes. We have all heard the stories recently about troops being forced out of swimming pools and people putting in planning objections to buildings—at Headley Court and elsewhere—that will be used by people visiting their loved ones who have been injured in the forces. These things are commonplace and it is the job of all of us and others—including the media, I would like to think—to change people's attitudes.
	Fundamentally, it is true that how much money we spend as a nation on defence is a big issue. We frame it in terms of a proportion of our gross domestic product or sometimes we talk about increasing expenditure in real terms. Whatever we do, there is an argument to be won with the public at large. For that reason, when we talk about the military covenant, we should think in those terms—of the public at large—rather than just in terms of the relationship between Ministers, the Government and service personnel.
	I want to add a mild note of criticism. People generally tend not to criticise the Royal British Legion and, on the whole, I do not either. I do think, however, that a touch of some aspects of its campaign over the military covenant has jumped into that space for criticism. It may have been done for good campaigning reasons, but it has jumped into that space where people have tended to view the campaign as a criticism of the Government. I find it slightly peculiar that the Royal British Legion put on events at party conferences, yet did not allow Ministers to speak on the grounds that it would be political. Why come to party political conferences? It seemed rather peculiar. The Royal British Legion's campaign has largely been sound and appropriately delivered, but some aspects in the margins should be thought about again more critically before it launches into its next big campaign on whatever subject.
	I would now like to say a few words about what I believe to have been disgraceful behaviour in the other place, which was co-ordinated and organised by the former Chiefs of the Defence Staff. These are people who want to put themselves above politics, yet they will quite happily stand at the launch of a perfectly legitimate "Way Forward" Tory party document. I realise that Conservative Way Forward is more a Tory think-tank than an official party document, but it is preposterous in the extreme to think that former chiefs of staff can write a foreword to a political pamphlet and then try to pretend that they are above politics. That is a farce. Frankly, although I realise that they have a great deal to contribute—they are enormously talented and capable officers—if they want to put their political cards on the table, let them do it, but let us not shilly-shally about what their political sentiments are.
	BlackBerrys are a miracle. I think I am right in saying, Mr. Deputy Speaker, that I am allowed to get some data on my BlackBerry as I am sitting here. I say that because this may not be a complete list. I do not think that General Guthrie mentioned the fact that he was a paid director of Colt Defence, Siboney Ltd, Sciens Capital, and Rothschild; or that Field Marshall Inge mentioned that he was a paid director of Aegis, which clearly has interests in Iraq, Afghanistan and elsewhere. They are excellent companies, by the way, and I know that they will be very excited and pleased to see themselves referred to in this place today. Lord Boyce is a paid director of WS Atkins and of Vosper Thornycroft. I may be wrong, as I have just had a quick perusal of the  Hansard from the other place. I do not know, Mr. Deputy Speaker, what the rules are and I doubt whether they have broken any of them. However, I will say that former chiefs of staff are probably earning more from their directorships than paid Members of this House and that if they do not want to declare those directorships and if they want to get politicised and personalised—

Mr. Deputy Speaker: Order. I hesitate to interrupt the hon. Gentleman. It is one thing to refer to the qualifications and interests of Members of the other House, but he must be careful not to imply anything else when he makes these remarks.

Eric Joyce: I appreciate that, Mr. Deputy Speaker. Let me just say that if they want to become personalised and politicised and to earn lots of money from interests that they do not declare before they make a speech, that will enormously devalue how they are perceived. That would be a great pity, as it would devalue their advice and their comments, which would be highly regrettable.
	Let me make one final point. The hon. Member for Mid-Norfolk—as ever, he makes very good points— referred to the important relationship between Ministers and chiefs of staff. That really is important. General Jackson has made many comments recently, and I sometimes think that he is being criticised for having been highly professional about how he conducted that relationship. Perhaps it is time for the former chiefs of staff in the other place to reflect on whether they think that their co-ordinated and politicised outburst of a couple of weeks ago helped or hindered the relationship between Ministers and the current chiefs of staff. If a Minister is chatting to a chief of staff about the important issues of the day, he might be thinking that in a couple of months' or a year's time, that chief of staff will be quoting personal conversations or behaviour and slagging him off personally. That is highly regrettable. The former chiefs of staff next door have done considerable damage. I know that they will not be embarrassed. From what I can see of them, they are not embarrassed at anything as they think that they are above politics. Well, they are not.

Patrick Mercer: It is a great pleasure to follow the hon. and gallant Member for Falkirk (Mr. Joyce), many of whose comments will bear much closer interest and much further address by both Houses.
	I want to talk about a subject that goes to the very heart of the military covenant. It is a subject that has been hinted at by the Ministers and Liberal Democrat Members who are present, but which is rarely mentioned for the evil that it is, red in tooth and claw, and for the damage that it does, particularly to the Army. Bearing in mind the former service of my colleagues on the Front Bench, my hon. Friends the Members for New Forest, East (Dr. Lewis) and for Westbury (Dr. Murrison), I will concentrate most of my comments on the Army, but some if not all of them will apply to the Royal Navy and the Royal Air Force. I wish to talk about the evil of undermanning, principally inside the Army, and the vast damage that it is doing to the covenant as we understand it.
	We are told that the Army is 3,000 men under strength. That is complete and utter nonsense. It is more like 10,000 men under strength, and it is rapidly approaching a position where battalions, brigades and regiments are incapable of operating in the field and where units are deploying on operations at a non-combat-effective strength, as I shall illustrate in a moment. Why do we not hear about that in more detail? The reason is that, with respect, it is only anoraks such as me who have been deeply involved in this stuff in the past who understand it—I do not mean to sound like an old sweat, but there we are. Also, we do not hear from the former Chiefs of the Defence Staff, because they were responsible for a drama that occurred several years ago, which has now turned into a crisis that is likely to bring units to their knees, if it has not done so already.
	Some 18 months ago, the 1st Battalion the Staffordshire Regiment, now scrapped and turned into something call the Mercian Regiment—excuse the curl of my lip—deployed to Iraq one rifle company strong, with another company that was capable of driving and manning its Warrior armoured vehicles. That was all: the unit was not combat-effective when it deployed.
	We recently heard of some regrettable deaths in action in a unit that rejoices in the name of the 2nd Battalion the Yorkshire Regiment, but which we will more properly call the 19th of Foot, the Green Howards or the North Riding. The unit is meant to be 600 strong—that is its peace establishment—but it is not. It is 100 men under strength already, in peace time. When the unit deployed to Helmand in Afghanistan, it left 100 men who were unfit for operations back in its barracks. The unit left behind another 200 men to man the barracks in England. From personal experience, I know that that will involve compassionate cases, people on career courses and, in fairness, people who are recruiting. A unit of 500 therefore went into the field 200 strong. The unit had 100 reinforcements from the Territorial Army—God bless them—and 200 reinforcements from the rest of the regular Army.
	If I asked the Ministers present what the tour gap would be for the 2nd Battalion the Yorkshire Regiment, they would probably come up with a reasonable figure of, let us say, 12 to 15 months. What they will not know—this is no fault of theirs; I hold them both in the highest regard—is where those regular reinforcements will have come from or what the tour gap will be for those guys who are now out in Afghanistan, because it will not be recorded. I understand that. The point is that those young men who are out there as regular Army reinforcements with the 2nd Yorkshires will get almost no tour gap at all. I shall describe the effect of that later. What is also interesting—I ask the Ministers please to listen to this—is that there are no battle casualty replacements beyond the pool of 17-year-olds who will turn 18 while the battalion is in Afghanistan.
	When the commanding officer of my former regiment, which used to be called the Worcestershire and Sherwood Foresters before it too was scrapped, started to suffer fatalities among—mercifully in a way, although that is quite the wrong word to use—private soldiers, lance-corporals and the like, he went to the system and asked for battle casualty replacements. The system said "You have some 17-year-olds who are about to turn 18. Physician, heal thyself." He was able to do that. Then senior officers began to be killed. He went to the system and said "Could I please have a new sergeant and a new captain?" I mentioned Captain Sean Dolan the other day at Prime Minister's questions.
	The answer came back, "You have 17-year-olds who are about to turn into 18-year-olds." The commanding officer said "No, I do not want recruits out of the depot aged 18 who, God bless them, are only combat infantrymen. I want hardened, trained sergeants, captains and the like." The system said to him "Phone a friend. Get hold of your mates. See whether they can provide another captain or another sergeant for you." He ended up robbing Peter to pay Paul—going to units in theatre asking BCRs to come forward. If my grandfather had experienced that at Passchendaele or my father at Anzio, they would have laughed at a system that had reached such a parlous state.
	What are the implications? As I have said, on paper the Army is 3,000 under strength. As for the reality—which I illustrated with the figures for the 2nd Battalion the Yorkshire Regiment—I reckon that about 10,000 men are under strength or combat-ineffective. On top of that, the Government in their wisdom have decided to disband three battalions. I say to Ministers "Please, let us get this sorted out." If there are more battalions than there is manpower to man them, let us get rid of the very expensive senior non-commissioned officers and the like. Let us try to rationalise the manpower that we have. Let us turn that into effective units. But we cannot have cadre-strength units deploying on operations when they are not ready to fight.
	We should roundly condemn the efforts of the Ministry of Defence, and in particular the recruiting agencies in the Army. Recruiting is clearly but an adjunct of the manpower equation, which consists first of recruiting, secondly of retention of recruits during training, and thirdly of retention of serving soldiers. The MOD must get a grip. It is perfectly possible to recruit. Believe me, I have done it, in a recruiting famine—admittedly a few years ago, but when the economy was in considerably better shape than it is now. Along with others, I produced a battalion that was 100 men over strength. It can be done. I will not listen to the excuses of—with respect—the Scots in particular, who say that it is impossible to recruit in Scotland. If it can be done in Nottinghamshire and Derbyshire to the level that we achieved, it can be done anywhere. At present, with the armed forces' reputations never higher and with the economy, sadly, rapidly deteriorating and all the implications that that carries, it is a disgrace that we see no recruiting parties in the constituency of Newark. There are kids there who are gagging to get into uniform.
	How does this impinge on the military covenant? I think it is very simple. If you do not have enough blokes, the nasty bits come around too often, and when the nasty bits come around too often, the blokes leave. They do not leave because they want to; 'er indoors makes them go because she is fed up with living in Tidworth, which has rotten schools and rotten housing and is a million miles from Nottingham where mam is with the kids, back in St Ann's or somewhere similar. She cannot see her family, and her husband is not just away, but away and in serious danger. Then he comes back and cannot go on his career course because there is no time. That means that he cannot be promoted and cannot pick up the extra money that would come with promotion, and she exercises not unreasonable but wholly irresistible pressure on that young man to leave the Army. As a result, we lose the services of the most important, best-trained and most gallant men whom we have.
	Undermanning, which is a function of poor recruiting, poor retention in training and appalling retention in the units, is crippling the Army. I urge Ministers to consider the position carefully, and to put their personal energy and determination into rattling the cages of incompetents in the MOD and trying to sort this out before it becomes a real crisis.

Kevan Jones: I welcome the debate. I recognise the hard work done by the Royal British Legion, but I agree with my hon. Friend the Member for Falkirk (Mr. Joyce) that some of its campaigning has been a bit misguided. I think that it has been hijacked by certain people for particular reasons. The hon. Member for Westbury (Dr. Murrison), who referred not to honouring the covenant but to the broken covenant, is a good example. However, the most disgraceful example that I have seen in the past few weeks is the pamphlet produced by the hon. Member for North Essex (Mr. Jenkin), published by Conservative Way Forward, which uses the poppy symbol as a way of blaming the Government for people's deaths in both Afghanistan and Iraq.
	I wish to say a few words about the campaign and military issues to do with medical services. I am proud to be a member of the Defence Committee, and I can say that in the inquiry that we are currently undertaking we are coming across only good news stories on the military services. On armed forces compensation, the criticisms coming from the Conservative Front Bench would have more credibility if they had also been made when the relevant Bill was passing through the House, but they were not. I served on the Committee that dealt with that Bill, and I can say that it was this Government who brought in lump sum payments for the first time for wounded servicemen and women. All the hon. Member for Aldershot (Mr. Howarth) did in terms of the report to the Defence Committee was oppose my suggestion that unmarried partners should benefit from pension entitlements, arguing that it would be immoral for them to receive such payments.
	I know time is short, but I wish finally to comment on the point made by my hon. Friend the Member for Falkirk about the former defence chiefs. I agree with everything he said, and let me add that I think some of them have selective memory loss. On the "Today" programme on 14 July 2004, Lord Boyce said about my right hon. Friend the Prime Minister when he was Chancellor:
	"I was encouraged that the Chancellor in his statement recognised the work that had been done by the Armed Forces who"
	have had a
	"particularly busy few years and by matching the good increase that happened in spending around 2002 with a similar sort of increase this time. So that is certainly to be welcomed".
	That is in stark contrast to what Lord Boyce is saying now. Former defence chiefs sometimes need to be reminded of their earlier comments when they make statements in the other place.

Willie Rennie: I am sorry that the hon. Member for North Durham (Mr. Jones), who is a colleague of mine on the Defence Committee, did not have more time in which to speak; I am sure he will make up for that at future meetings of the Committee. I also want to apologise for not being present for the start of the debate. I missed what I am sure was an excellent speech by my hon. Friend the Member for North Devon (Nick Harvey). I noticed, however, that the Chamber calmed down once he had left; things were much more stable when he went for his cup of tea.
	I did not hear an apology from the Conservative Front Bench for the Annington Homes fiasco during their contribution, which was churlish and full of animosity. I presume there was slight embarrassment that the Conservatives did not call this debate, as they perhaps did not regard it as being of sufficient priority to the Conservative party. I am pleased that we have called it, however, because it is an important debate.

Andrew Murrison: Where was the hon. Gentleman on the last occasion we had an opportunity in Government time to debate defence, which was on 16 October, and where was he on Monday night when we discussed the mental health problems that face our servicemen and veterans?

Willie Rennie: I can provide a full copy of my diary if the hon. Gentleman wishes, as I am sure he would follow it in great detail. I attend the vast majority of defence debates in this House. I take a great interest in defence matters, as I do on the Defence Committee itself, so I will take no lessons from the Conservative party on these issues.
	There have been some great contributions. The hon. Member for Midlothian (Mr. Hamilton) talked about his experience with the Glencorse barracks and the families and education and housing. My hon. Friend the Member for Portsmouth, South (Mr. Hancock) talked about his experience on the Defence Committee and passionately discussed housing, which has been a common theme of many contributions. The hon. Member for Blackpool, South (Mr. Marsden) talked about priority treatment for veterans and the Veterans Agency. The hon. Member for Mid-Norfolk (Mr. Simpson) made a good speech in which he talked about the breakdown in the relationship between Ministers and the senior military. The hon. Member for Falkirk (Mr. Joyce) talked about his expertise in the military and the contribution that people such as he can make to the House. He also criticised the former defence chiefs. The hon. Member for Newark (Patrick Mercer) talked about the Army being under strength by about 10,000 and said that we needed to recruit more people to the armed forces. The hon. Member for North Durham (Mr. Jones) talked about the British Legion campaign in slightly less glowing terms than others have done.
	I want to pay tribute to the armed forces, which are among the best in the world—indeed, they may be the best. Two of my constituents, Captain John McDermid and Private Scott Kennedy, have passed away within the past year, and I am sure that the whole House will join me in sending our thoughts to their families and friends.
	There is no doubt that the armed forces are overstretched. The National Audit Office says that they are 7,000 below strength. We have heard another figure of 10,000 in relation to the Army alone. For at least the past five years the forces have been operating above predicted deployment levels. One in six soldiers is on missions more frequently than the harmony guidelines rule. Health professionals are the worst hit, and reservists fill far too many of the posts. The situation is so desperate that the forces are scraping around for volunteers. Military bandsmen have been put on standby to replace infantry battalions, and storemen from Faslane are being asked to do front-line duties in Iraq. Even Members of the Scottish Parliament are now in the frame for action. I am sure that the right hon. Member for Banff and Buchan (Mr. Salmond) will soon be asked to serve next. I am sure that he sees himself as the He-Man on the front line in Helmand, but, as happens in this House, he will probably not even bother to turn up.

John Barrett: One positive thing that is going through the Scottish Parliament in relation to today's debate is the Member's Bill to allow the fatal accident inquiries for Scottish soldiers who have died abroad to be followed through in Scotland. If the Bill were passed, it would reduce the wait involved, both for Scottish families and families south of the border. Does my hon. Friend agree that this is a sensible way forward?

Willie Rennie: My hon. Friend raises a good point, and I was going to address that subject later. I would like to hear an update from the Minister about the negotiations that have taken place with the Scottish Administration about the possibility of managing to get the Bill through so that we can relieve some of the pressure down south.
	The planning assumptions set up in the strategic defence review in 1998 did not allow for two major deployments, such as those in Iraq and Afghanistan, at the same time. With overstretch and under-resourcing we are in danger of abusing the good will of the armed forces and turning the can-do ethos into a make-do muddle. I am sure that many people agree that the Iraq campaign was a huge mistake in its own right. It had not only a massive impact on our reputation on the world stage, but an equally damaging effect on our armed forces because of overstretch. The number of attacks reduced in Basra as a result of our withdrawal from Basra palace, and the logical conclusion is to withdraw from Iraq altogether. We also have serious doubts about 2,500 personnel being the minimum force protection that is required from next spring. The Minister for the Armed Forces referred earlier in the year to a figure of 5,000. I have two questions for that Minister. Are we relying on the Iraqi forces to protect our forces in Iraq? Will the Minister respond to claims that a deal has been done with General Mohan to free Mahdi army prisoners in return for relief from the attacks on our forces?
	Numerous hon. Members have talked about housing. Despite protestations from the Government, single living accommodation is in a terrible state—almost half that accommodation is of the lowest standard—and many officers and soldiers say that it is a significant reason for leaving the armed forces. The Armed Forces Pay Review Body has highlighted the reduction of about 14,000 bed spaces in respect of modernisation between 2001 and 2007. During that time, the MOD delivered £2.2 billion in asset sales to the Treasury. The Government say that they have a 10-year plan, but the former Deputy Prime Minister had a 10-year plan for transportation, and look what happened to that.
	Health has come up as an issue on numerous occasions. The Defence Committee has conducted an inquiry into that very subject. The difficulties are not at the acute end, but at the mental health and primary care ends. The issue is about the relationship between primary care and secondary care, but the one between primary care and the military is also the difficulty. We should perhaps look more into creating those links so that people do not fall between the stools.
	We have covered the issue of inquests, and I would like to see some progress in Scottish authorities being allowed to take part in dealing with casualties from theatre.
	What are the consequences of difficulties with housing, health and overstretch? The result is that personnel are disillusioned. In a recent survey, three in 10 said that they did not feel valued, and one in four said that morale was very low or low. There are retention difficulties, with 5,000 leaving the forces in the last year, one in five wanting to quit and more than half thinking about it. Crucially, a third blamed overstretch.
	The Government have made grand pronouncements about the care of our armed forces. They feign disgust when the generals speak out and they say that the armed forces, unlike Oliver, never ask for more. But there is a mismatch between the rhetoric and the reality—on shoddy housing, overstretched personnel, bereaved families waiting for months and years for answers, over-used and faulty equipment, and paltry compensation. The Government are failing our armed forces who, for their gallantry, bravery and selflessness in service of their country, deserve so much more. I urge the Government to concede that those dangerous radicals, the Royal British Legion, may have a point and honour the covenant.

Derek Twigg: It has been an interesting debate. I pay tribute to our armed forces and their families. Our armed forces are the most outstanding in the world, and I have had the privilege of meeting them in both Iraq and Afghanistan, as well as around the UK and elsewhere. They never cease to amaze and impress me with what they do. Their families give them so much support and deal with so many issues.
	I also thank those who support our armed forces. The debate today relates to the Royal British Legion covenant, but I include ex-service organisations and charities, such as the Soldiers, Sailors, Airmen and Families Association—SSAFA—which has done an outstanding job in terms of housing at Headley Court and helping to refurbish the accommodation at Selly Oak. The Royal British Legion has done an excellent job in working with the homeless, with the Compass project and with ex-service personnel in prison. Other wonderful organisations include BLESMA, the British Limbless Ex-Service Men's Association, which does an amazing job with amputees. There are also the regimental organisations and benevolent funds, as well as the families federations, which provide tremendous support for service families.
	We are now doing more than ever to support our armed forces and their families, and I shall set out some of the reasons why I believe that to be the case. I welcome the Royal British Legion campaign, because it gives us the chance to have this debate and set out what more we are doing, and can do, and to listen to what other people are saying. I spoke with the Royal British Legion before it announced the campaign, and it recognised that the Government have done a lot to improve the support for and treatment of our armed forces and their families. It recognises that, but of course it wants us to do more. We have announced a Command Paper, which will consider what we have done and what we need to do across the Ministry of Defence, the armed forces and the whole Government to support our armed forces and their families. I welcome that, because it will do a lot of good work. It will report in the spring and provide an important benchmark for what we have done and what we will do in the future.

John Baron: I agree with much of what the Minister has said, but does he not think that it is an absolute shambles that the recent Public Accounts Committee report highlighted the fact that almost half of all forces accommodation is substandard and that there are significant gaps in the Ministry's understanding of its estate and where priority funding is needed? What will the Minister do about that?

Derek Twigg: I welcome the report, but I do not accept the facts. More than 90 per cent. of the accommodation is in category 1 or 2. We recognise the legacy of underfunding over decades, and I hope that Opposition Members accept their responsibility for that, not least in terms of the Annington Homes deal and how it has affected accommodation. We continue to give priority to the worst accommodation. We are doing a great deal to improve provision, with 12,000 family homes improved over the past six years and £5 billion to be spent over the next 10 years. We have made significant inroads into the problems that we inherited and for which we, of course, now have responsibility.
	I turn now to the speeches made in the debate. My hon. Friend the Member for Midlothian (Mr. Hamilton) made some interesting comments about education, as did the hon. Member for Westbury (Dr. Murrison). I can assure the House that we continue to work hard with our colleagues in the education Departments on the problems in the system.
	My hon. Friend the Member for Midlothian also made an important point about the challenge that we face in distributing the resources, and he set out the difficulties that the shortage of skills causes to our efforts to improve housing. He also noted the role of local connections in prioritising service personnel. He mentioned Scottish issues, and I have had discussions with those members of the Scottish Executive and the Welsh Assembly who have responsibility for armed services matters.

David Hamilton: I realise that time is very short, but will my hon. Friend also have discussions with the Royal British Legion Scotland, which is separate from the UK Royal British Legion and is, of course, older?

Derek Twigg: I have good relationships with Poppyscotland and am happy to have discussions with that organisation at any time.
	The hon. Member for Portsmouth, South (Mr. Hancock) made some interesting points about the Select Committee hearing on the subject of health, at which a good debate took place. He also mentioned the Annington Homes deal, which has caused so many problems for housing. However, he agreed that the military covenant was not broken and that the Government were doing a significant amount to improve things.
	The hon. Member for Mid-Norfolk (Mr. Simpson) is a distinguished historian with great experience of the staff college. I always listen to his views, although I am not sure that I agree with his picture of the relationship between chiefs and Ministers. I see the chiefs all the time and, although they are robust and put forward their views, we have a good relationship. If he goes back to Alanbrooke's diaries and their account of his relationship with Churchill or of the relationship that the Adjutant-General had with Churchill, he will know that history offers us some interesting guidelines. I always listen to what the hon. Gentleman has to say, but I do not accept his analysis on this occasion.
	My hon. Friend the Member for Falkirk (Mr. Joyce) raised some important issues about spending on the armed forces and the public debate that we should have. My hon. Friend the Member for Blackpool, South (Mr. Marsden) made an important point about our service and support for veterans. It is important that we support them, whether with mental health care or priority treatment—the Secretary of State for Health and I have recently announced some initiatives on both points. Veterans are important, so I hope that all hon. Members will support Veterans' day on 27 June next year. We are getting ever more support for that day from local councils and local authorities.
	The hon. Member for Newark (Patrick Mercer), of course, has great experience. I always listen carefully to his comments and he made some important points. However, he will know that significant work is also going on in recruitment and retention. I recently met the chief personnel officers for each service to talk about that and we continue to do lots of things to deal with the problem.
	My hon. Friend the Member for North Durham (Mr. Jones) made a point about compensation. The 2005 scheme introduced a lump sum and a guaranteed income payment scheme. It is important that we recognise that, to the most seriously injured, that can amount to significant amounts of money—hundreds of thousands of pounds during a person's lifetime.
	The Liberal Democrats have produced a document called "Our Nation's Duty" that fails to recognise the progress made by the Government or the measures that we have taken. I do not think that they understand the many things that we are doing.
	The hon. Member for North Devon (Nick Harvey) spoke specifically about health. I visit injured service personnel in Selly Oak, Headley Court and elsewhere, and I also speak to their families. Overwhelmingly, they believe that the Government are providing excellent support and medical care. As for aftercare, Headley Court provides excellent rehabilitation, and good progress has been made elsewhere with welfare for families. To improve matters further, we introduced in October a pathway of care that allows us to follow injured personnel from the time they are evacuated back home right through to their eventual discharge. The pathway of care will be rigorously monitored, by Ministers and by those involved at the centre. I believe that that important step forward will ensure even better standards of service and care for our armed forces personnel.
	The hon. Member for North Devon talked about establishing military wards in the medical defence units around the country. Those units have military medical people who work with NHS staff, but we do not believe that they should have solely military wards, as usually there are not more than two wards full of military patients at any one time. However, it is true that we are developing a military-managed ward at Selly Oak. Lots of military people are involved in that, including a military ward master, and we are also in discussions about how the new hospital building there can be used to improve the care that we offer.
	In the minute that remains, I want to remind the House about all the things that the Government have done for the armed forces. For example, their pay rise this year was the best in the public sector, amounting to more than 9 per cent. for the most junior ranks. Military personnel also get an operational bonus worth £2,320, as well as council tax relief. The welfare package for our armed forces is the best that we have ever had, and the facilities at Headley Court and Selly Oak offer greatly improved support and welfare provision for casualties and their families. I believe that our armed forces now get the best medical care that has ever been provided.
	As I said earlier, significant amounts of money have been spent on housing for our armed forces, and much progress has been made in that regard. Other improvements include the modernisation of terms and conditions for the Gurkhas, which has been welcomed by many people. In addition, we have taken many initiatives to improve recruitment and retention in the services.
	I welcome this debate. The Government are doing a great deal to improve the support extended to our armed forces and their families. I believe that it has never been better, but we continue to look at what more we can do, and I am sure that the Command Paper that my right hon. Friend the Secretary of State has announced will lead to further improvements in the future.

Question put, That the original words stand part of the Question:—
	 The House divided: Ayes 71, Noes 302.

Question accordingly negatived.
	 Question, That the proposed words be there added,  put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.
	Mr. Deputy Speaker  forthwith declared the main Question, as amended, to be agreed to.
	 Resolved,
	That this House recognises the commitment, bravery and professionalism of the armed forces in all their operations; further recognises the enormous contribution made by service families to the effectiveness of the UK's armed forces and the debt owed by the nation to veterans; welcomes the major programme of improvements made by the Government to support all of these groups since 1997, including in the areas of medical support and improvement and replacement of sub-standard service accommodation; further welcomes the role played by ex-service organisations and other charities in contributing to the support of these groups and the Government's commitment to working closely with such bodies to improve support in the future; and commends the Government's decision to produce a cross-cutting Command Paper setting out the progress already achieved in this area and what more will be done in the future.

Northern Rock

Mr. Deputy Speaker: I must tell the House that Mr. Speaker has selected the amendment in the name of the Prime Minister and that there is a 10-minute limit on Back-Bench speeches.

Vincent Cable: I beg to move,
	That this House notes with dismay that the Chancellor of the Exchequer has presided over the first run on a UK bank for over one hundred years and that the taxpayer has now made approximately £30 billion worth of loans to Northern Rock without the Government providing evidence of either the exact amount or the security of the loan, over and above deposit guarantees; further notes that the current search for a private purchaser for Northern Rock faces enormous difficulties in the face of the high costs of credit and the conflicting interests of different groups of shareholders; applauds the important role played by the Northern Rock Foundation in the North East and regrets the potentially negative consequences for jobs in the North East should Northern Rock go into administration; further regrets that the Chancellor chose not to recognise the importance of Northern Rock as a large employer in the North East amongst his principles for assessing Northern Rock proposals; calls upon the Financial Services Authority to suspend trading of shares in Northern Rock immediately to prevent insider trading; and calls upon the Government to introduce legislation to allow for Northern Rock to be placed immediately in temporary public ownership as the only action that will guarantee the loans are paid back in full as soon as possible at the lowest risk to taxpayers.
	We are very much in the middle of a banking crisis that is without precedent— certainly in my lifetime and probably for most of the last century. I was always brought up to believe that banking runs occur in far-off countries and that the lender of last resort is an obscure academic construction that appears in monetary textbooks, not the real world. However, I suspect that when the dust has settled on the Northern Rock affair, future generations will think of it much as people think of the South Sea bubble: a major historical event when a speculative bubble in financial markets burst. If one were to be pessimistic by thinking that the crisis will continue unabated, one could well seek a historical precedent in the Creditanstalt in Austria in 1931. Those events had major financial and economic repercussions.
	We are dealing with enormous sums: approximately £30 billion of Government loan, which excludes the deposit guarantees. To try to help Members get their heads around that, I point out that 30 billion is a "3" with 10 noughts. It is impossible to be precise about how much money is involved because the Government do not give the necessary information, and neither does the Bank of England. The information can only be inferred from the Bank's balance sheet, but the figure is approximately of that order of magnitude.
	To put the amount in context so that we can make sense of such an enormous number, I simply equate it to a little bit less than the annual defence budget. Given that it is a one-off payment, we are talking about six Iraq wars. Such a sum would build a high-speed train route from London to Edinburgh, and enough money would be left to build another one to Glasgow. The sum is the equivalent of about £5 million for every Northern Rock employee.
	That leads me to a key aspect of the argument: we are talking about not just money, but people. I have been to Newcastle several times in the past year to talk about its economic situation. Northern Rock is a major employer in north-east England. I understand that it has about 3,500 employees in Newcastle and about 1,500 in Sunderland. In addition to that employment, it has been an important part of the repositioning of the north-east of England from manufacturing towards financial services.
	In addition, the Northern Rock Foundation makes an important charitable contribution. It has spent some £175 million over 10 years, but it does not just spend a lot of money. As I discovered when I walked along Hadrian's Wall last summer, an enormous number of local charities rely on the foundation for obtaining charitable money quickly and effectively. They receive the money from the foundation much more effectively than they do from the national lottery.
	Before Ministers stand up and pose as angels of the north, it would be worth while for them and their Back-Bench colleagues— [ Interruption. ] I entirely understand why Labour Back Benchers will quite reasonably wish to speak up on behalf of their constituents and their constituents' jobs. If I was in their position, I would do exactly the same. However, if they have not already done so, I urge them to study the document on the principles for assessing Northern Rock proposals, which is the basis for the Government's sale. Those who have studied it will realise that it says absolutely nothing—not one word or one syllable—about either employment in north-east England or the Northern Rock Foundation.

Jim Cousins: I have studied that document, too. Has the hon. Gentleman looked closely at the last part of it, which refers to a long-term recapitalisation of the business and a sound business plan in the medium term? Will he bear it in mind that that statement of principles was put out on behalf of not only the Government, but the Bank of England and the Financial Services Authority, which can hardly deal with the matters about which he is thinking?

Vincent Cable: If the hon. Gentleman is basing his hopes on a sound business plan from the private bidders, I fear that he may well be disappointed. I will come to the details of the private bids in a moment.
	A couple of days ago, I had a long session with one of the bidders, who had just come back from a tour of Northern Rock's north-east facilities. He said that he did not know whether to laugh or cry. He had been round the call centre, where every single employee was reading books and magazines because there was no work to do. Any Labour Member who imagines that some of the vulture investors who are part of Mr. Branson's consortium have the slightest interest in preserving that employment are labouring under an illusion. I do not know whether they realise, for example, that one of his largest investors is a gentleman called Wilbur Ross, who made billions of pounds in the United States smashing trade unions and ripping away company pension schemes. My starting point is that the employees of Northern Rock and the people of north-east England deserve rather better than that, which is what is likely to come out of the private bidding process.

Kevan Jones: Is the hon. Gentleman at one with the leader of the Liberal Democrats on Newcastle city council who, along with the majority of elected politicians in the north-east, supports efforts to get a solution for Northern Rock? Is he not in danger today, with the emotive language that he uses, of running down the company and making matters worse?

Vincent Cable: I am a strong fan of the leader of Newcastle city council. The Liberal Democrat group runs that city admirably. He has been endeavouring on an all-party basis both to honour the 100-year history of the bank and to find a solution to it. I have discussed it with him several times. He understands that the options are running out and that the solution that I am proposing—temporary public ownership—will probably serve the interests of the people who live in that region better than the hopeful venture being promoted by the Government.

Kevan Jones: One thing that Councillor John Shipley is not doing is talking the bank down or trying to talk the region down. He is trying to work with other people to support it. The Liberal Democrat council even gave the freedom of the city to Northern Rock a few weeks ago.

Vincent Cable: The council did that on an all-party basis and was right to do so, given the bank's past contribution. I have never run down the employees of the bank, with the exception of the chief executive, whose role in all this I will come to shortly.
	What amazes me is that had we not initiated this Opposition day debate, there would have been no discussion of this massive problem before Christmas. The Conservatives have had three Opposition days and have chosen not to take the subject on any of those occasions. They seemed to think it was more important to discuss a £950 gift to a third division Scottish politician called Wendy than to have a debate on what has happened to £30 billion of taxpayers' money.
	I have been trying to establish what the leader of the Conservative party thinks about the matter. He followed me on the "Today" programme yesterday and denounced nationalisation as a matter of principle, but as far as I could establish, and no doubt we will hear more in a few minutes, his only solution seemed to be to follow the Government and keep an open cheque book.

David Drew: I, for one, congratulate the hon. Gentleman on calling the debate. Did he consider another option—the possibility of remutualising Northern Rock? Some of us feel strongly that one of the great problems of demutualisation is that it was predictable that some companies, because of the nature of the marketplace in which they operate, would overstretch themselves. Is it not time we looked at the strength of mutuals again?

Vincent Cable: That is a helpful intervention, with which I have a great deal of sympathy. I used to be involved in an organisation called Save Our Building Societies, which campaigned against the original demutualisation of Northern Rock for precisely that reason. After a period of temporary public ownership, that might be one of the options that appear viable, but rushing into a sale now would preclude it. The hon. Gentleman is absolutely right.

Steve Webb: Reflecting on the constructive contribution of the official Opposition, what conclusions has my hon. Friend drawn from the fact that they had no opinion on the Order Paper and tabled no amendment to the debate?

Vincent Cable: My colleague reinforces my point. I am sure we shall hear what the official Opposition have to say. I imagine, by default, that they want to see the company put into administration, its total closure, and the wiping out of the company without any opportunity for it to be relaunched. I assume that that is their default position, but no doubt we will hear from them.

Doug Henderson: I understand theoretically some of the points that the hon. Gentleman is making, and I have read the motion. Is he aware that Northern Rock employees do not want nationalisation? If it is difficult now to sell the business as a going concern, they wonder how much more difficult it will be to do so in future. The small shareholders, some of whom I see in the Gallery, oppose nationalisation because they would lose any value that they have.

Vincent Cable: I will come to those points. However, I should say in passing that there is an issue with the small shareholders; I understand that. Many of them, of course, acquired their shares free on demutualisation. Many of the people who call themselves "small investors" are not small; I believe that Lord Stevens is a large investor who bought into the company quite recently in order to make a killing from it. The key shareholders, of course, are the hedge funds, whose role I shall deal with shortly.

John Redwood: As one who has set out a positive alternative if the bids do not produce a satisfactory result, may I ask the hon. Gentleman how he can believe in the idiocy that taking on more than £100 billion of Northern Rock's liabilities—all its liabilities—would be good for the taxpayer? Why should the taxpayer have to pick up the bill for any losses, redundancy payments and other problems that nationalisation would bring?

Vincent Cable: Taxpayers are already committed to the hilt; they have already advanced staggering sums. In normal circumstances, I would not dream of recommending my solution, but we are in an extremity—and in an extremity we have to look at the options. The one that I propose is the least undesirable; I shall come to the reasons for that.

Peter Atkinson: The hon. Gentleman has been dreadfully dismissive of the small shareholders, of whom there are 140,000. Yes, some acquired their shares on demutualisation and have been counting them as their savings for retirement. Many others, including people in my constituency, bought small quantities of shares because they wanted to support a good local business. They are the ones who will suffer. They should not be dismissed and put out of the picture.

Vincent Cable: I am not being in the least dismissive of small shareholders. However, when people buy shares, they take a risk. They understand that; it is in the nature of investing in risk equity. Is the hon. Gentleman seriously suggesting that taxpayers' money should rank behind risk investment by private individuals in the stock market? That is the implication of his remarks.

Peter Atkinson: rose—

Vincent Cable: May I move on? I have been generous with interventions.
	At this point, it will be useful to summarise why the Liberal Democrats have taken the position we have. I shall then develop in more detail comments on the financing of the company as it now is and discuss the options.
	Of course it would be desirable for us to start from somewhere else. The financial shock that hit the markets a few months ago was unprecedented and unexpected, but that does not excuse the Financial Services Authority, the regulator, which should surely have spotted the high risk associated with Northern Rock's reckless expansion. None the less, the event was unexpected. We reacted to it by supporting what the Government did to stop the run—that is, guarantee deposits. That was a sensible reaction.
	At the time, I opposed an open-ended unconditional loan to bail out the banks. Ever since the Government made that decision, they have been digging a deeper and deeper hole for themselves. There is nothing wrong in principle with exploring the idea of trying to get a private bidder, and that is why I do not fundamentally quarrel with some of the interventions from Labour Members. However, it has become painfully and increasingly apparent that, with the money markets now largely closed, it is simply impossible for any of the bidders, however credible or reputable, to raise the amount required, including the money necessary to guarantee the full repayment of the taxpayer. That is our position now.

Fraser Kemp: Presumably, the hon. Gentleman has done some calculations on his proposal for nationalisation. What is his best estimate of the potential liability for the taxpayer in the next two to five years?

Vincent Cable: The taxpayer is already heavily implicated in the company. Its liabilities include the deposits, which are already guaranteed, and they would include the loans that are rolled over but are not being rolled over at present because the market will not do it. In practice, the taxpayer is 100 per cent. liable for all these liabilities as they come due. If it was a nationalised company, temporarily, the Government would have some control over the process instead of being an entirely passive spectator. Let me retrace the steps to some of the key decisions that the Government have made. In September, there was a key decision to provide what was said at the time to be unlimited support. The question that needs to be asked—it relates to the intervention by the hon. Member for Houghton and Washington, East (Mr. Kemp)—is what estimate was made of the likely deposit withdrawal and the extent to which commercial loans would have to be replaced? At about that time, Lloyds bank made a proposal that involved £30 billion-worth of Government loans. The Chancellor, as we understand from the records, personally rejected that option on the grounds that the commitment of Government money was too large. We now know that £30 billion has already been advanced in Government loans without resolving the problem, so somebody made a horrendous miscalculation about the sums that were going to be involved. We need to know how that happened.
	A second basic question that I have been asking throughout is: why was this loan advanced in a completely open-ended and unconditional way? The Government, as the major creditor, could have said, "We will advance credit to the bank subject to the removal of the chief executive and others who were directly responsible for getting the bank into trouble in the first place." Any major creditor could reasonably insist on conditions, but the Government said, as did the Chancellor, rather pathetically, on several occasions in the Chamber, "We can't do anything about this because we don't own the bank." We now have an extraordinary situation whereby the chief executive of the bank, Mr. Applegarth, who drove the bank on to the rocks, is still sitting in the chief executive's chair driving the company and managing the Government's taxpayers' money. It is an extraordinary situation for the Government to have allowed to arise.
	Another fundamental question that I have asked is: when the loan had been advanced, what security did the Treasury or the Bank of England, or both, insist on in return for taxpayers' money? One would have thought that that was a reasonable, prudent provision to request. I have been writing letters to the Governor of the Bank of England to ask him what security was available, and he has written me a letter that is so shameless that even Sir Humphrey would have been embarrassed to sign it. There are no figures in it, nor an explanation of what happened to the rolled-up interest on the loan. It is completely and utterly uninformative and, frankly, borders on the impertinent, because the Bank of England and its Governor are saying that elected representatives have no right to know what happens to public money. That is a completely unacceptable position.
	We can infer—we do not know it because it has never been confirmed—that roughly half the funding of the bank loan is secured pretty solidly against the assets of the bank, but the other half is not. Most of it is secured against what are called the free assets of the bank; in other words, it takes a secondary role to that of secured creditors such as Granite, which accounts for about half of the balance sheet. It is argued that that is fine because the money is secured against the bank's mortgage book. However, it has emerged that among the assets of the bank against which the Government loan is secured are £8 billion-worth of unsecured loans. It appears never to have occurred to anybody in the Treasury or the Bank of England to ask how secure those assets were.
	The confidence of the Government and the Bank of England was based upon a belief that Northern Rock had a very good repayment record from its borrowers. On paper, that looks perfectly true. However, people have now started digging—notably Panmure Gordon, one of the brokers, which has established that a lot of bad debt is actually being hidden because the Northern Rock bank did not employ the sort of rigorous practices employed in other institutions such as Alliance and Leicester and Bradford and Bingley. However, whether or not that is the case, there was an underlying optimism, all based on the strength of the mortgage book and on the value of the domestic property that underlies those assets.

John Thurso: My hon. Friend has already highlighted the executive failings. Before he leaves the assessment of the debt, will he say whether he agrees that a major cause of the failure of Northern Rock was insufficient corporate governance by non-executives, and the failure of the audit committee and the risk committee to dig properly into these matters?

Vincent Cable: The directors who were directly responsible for those functions have now been removed, but that was well into the process.

Philip Dunne: In relation to the risk committee and the audit committee, is the hon. Gentleman in a position to confirm whether the individual who had that responsibility was none other than Sir Derek Wanless?

Vincent Cable: I believe that that was indeed the case.
	The optimism that I described rests upon the fact that the assets of the bank primarily consist of mortgages, many of which were obtained at the peak of the housing market in the earlier part of this year. There was an extraordinary explosion of growth in the Northern Rock bank—it grew by about 55 per cent. and took 20 per cent. of the market in the earlier part of this year. That growth was not backed up by deposits, and it accounted for the fact that the bank had to borrow heavily in the wholesale market, which then seized up. As I told the House a few weeks ago, it was possible then to go to the Northern Rock bank and obtain a mortgage of about 125 per cent. of the value of a property, and of four to five times a person's income. That was the sort of frenzied borrowing that took place at the peak of the market. I checked yesterday, and those loans are still on offer. This is a supposedly responsible lender in the middle of a banking crisis, dependent on loans from the Government.

Kevan Jones: I am very interested in what the hon. Gentleman is doing. He is continuing to run down the bank, which I do not think is a very clever thing to do. Anyone who has a mortgage with the Northern Rock bank or who has applied for one—in the north-east, traditionally—will know that it was a damned hard building society, then bank, to get a loan from. The traditional, old loans are quite secure.

Vincent Cable: The hon. Gentleman will have to explain how the bank managed to expand its business so rapidly in the earlier part of this year.
	The question I have been asking throughout is a "what if" question. We do not know the answer to it in reality, but it is an important question. What if the property market were to crash? I ask that because for some years before I came to this House, I worked in the oil industry. The question that was always asked by my prudent managers was, "What if the oil price were to fall drastically? What would then happen to our profits and our company?" Because they were always asking that question, they always hedged, diversified and prepared, and they saved themselves in difficult periods. What is amazing about this episode is that nobody at the top of the bank, nobody in the Financial Services Authority and none of the clever double-firsts in the Treasury ever seemed to have asked this basic question: what would happen to the value of these mortgages and of domestic property if the market fell heavily?

Rob Marris: May I turn the hon. Gentleman's "what if" question around? What would happen if there were such a property crash where there had been a nationalisation of Northern Rock? How many more nationalisations of banking institutions would the Liberal Democrats want in that "what if" disaster scenario?

Vincent Cable: We are dealing with a very specific case where the Government have already advanced £30 billion, and I am concerned with how that enormous investment by the taxpayer should be protected.
	To pursue the argument—I am just raising a possibility; we do not know that it will happen, and we hope that it will not—let us suppose that property prices fall very substantially. Twice in my working lifetime, domestic property prices have fallen in real terms by more than 25 per cent. It could happen again. We have been at the peak of an unprecedented bubble, the largest in the developed world. If it were to happen again, the obvious question is: what would happen to the value of the security that the Government have been given by the bank?
	One person understood this all along: Mr. Applegarth, the chief executive. He is still there, sitting in his chair at the bank. He understood all this and, at the peak of the market, he sold his shares. He was urging the small investors—to whom the hon. Member for Hexham (Mr. Atkinson) has rightly drawn our attention—to invest in his bank while he was selling up. We all know what happened. He invested his money in a very large country estate and bought a fleet of sports cars for his wife. That person is still at his desk at the Northern Rock bank; he is directing its affairs and is responsible for taxpayers' money. That is one of the unbelievable aspects of how this whole affair has been managed.

Alan Beith: My hon. Friend is underlining the tragedy of Northern Rock. Traditionally, it was based on the relatively limited lending base of the borrowers in the region, which placed a constraint on what it could do, and on the housing market in the region, which is nothing like as volatile as that in the rest of the country, and into which Adam Applegarth took Northern Rock in his reckless expansion of the company.

Vincent Cable: My right hon. Friend is absolutely right. His intervention underlines why, historically speaking, Northern Rock was so highly regarded, particularly as a building society but later also as a bank. The chief executive exploited that reputation to run it into a very dangerous situation. I am not blaming him alone, however. The regulators should have seen the dangers.
	I want to turn now to the different options available, and to where things stand in regard to the proposed private sale. There seem to be two serious offers, although others come and go. There is the offer by Branson, and that by Luqman Arnold's Olivant group. They differ in that Branson's consortium wants a takeover and is willing to trade on the basis of the Virgin reputation as a way of attracting new deposits, while Luqman Arnold is not interested in a takeover. He wants a minority stake and to run the bank properly while restoring it to its purpose as a responsible bank.
	In normal circumstances, I am sure that either of those proposals would be an interesting proposal to be treated with the market. This is an extraordinary situation, however, and it is becoming increasingly apparent that neither of those two, or any of the others, will be remotely able to raise the amount of money required to take over the bank as a going concern and give the Treasury the guarantees that it requires. Of course, they say that they can guarantee the first half, the £15 billion. What they cannot guarantee is the next £15 billion. That will be the difficult bit, because that is where the lack of security is.
	Nor should we be under any illusions about the motives of the people who are bidding. I have never met Mr. Branson, but he seems to be an engaging character who has had some successful ventures. He is, however, a front man for a consortium of hedge funds and private equity operators whose aim is to make a killing. He is proposing to invest about £200 million in a company whose gross assets will be more than £100 billion, and he will be hoping to sell it on in due course and make a large capital gain that, as he is registered overseas, might well not attract UK taxation. So we are not talking about Mother Theresa here; we are talking about some very tough short-term financial investors.
	As I talk about the bidders, it is coming back to me that the Government have made a bad mistake—even within their own policy—in giving preferential status to one of the bidders, the Branson group. The other bidders have discovered, as they enter the early stages of due diligence, that the Government—and the taxpayer—are paying the legal fees of the Branson consortium but they are not willing to pay theirs. Understandably, they are aware that they are not operating on a level playing field.
	I do not want to run Mr. Branson down, but it is a matter of fact—of which I was previously unaware—that he has a criminal record for tax evasion. There is therefore good reason to believe that the people who have to stump up the money for his consortium may well not regard him as a fit and proper person to run a public company, let alone a bank, and let alone as someone responsible for £30 billion-worth of taxpayers' money. So there are real questions about whether this private bid is ever going to succeed.
	In the context of the private bid, one must also ask—this goes back to the question about private shareholders—

Doug Henderson: I am not taking sides regarding which bidder is best— [ Interruption. ] I am not. However, does the hon. Gentleman not recognise that someone with the reputation of Sir Brian Pitman—the ex-chairman and chief executive of Lloyds bank, who is part of the Virgin Group's bid—is serious about what they are doing?

Vincent Cable: I am sure that Sir Brian Pitman is absolutely admirable. He is a 75-year-old ex-banker with a formidable history and I am sure that he is serious. I have talked to some of those associated with both the people in question, and they are serious people. That is not the problem—the problem is how they are going to raise, in markets that are now almost closed, the staggering amounts of money that they need to realise their bid. That is the issue—it is not about their character or their history in running banks.
	The private sale is becoming increasingly problematic, so we effectively have two options. One is to put the bank into administration, which is probably what everybody would regard as the "nuclear" option. Under those circumstances, not only are the shareholders in the north-east wiped out, but there are question marks over what happens even to the guarantee deposit. It would take a long time for those guarantees to be fed back to the depositors, and there would be continuing questions about deposits in other banks because of the difficulties. How would the public loan be retrieved? It would be retrieved either by a very slow run-off as the mortgages were redeemed, or through a fire sale in what is currently a very depressed market. Administration thus presents enormous problems, which is why we Liberal Democrats are suggesting that a period of temporary nationalisation is the least worst of the three basic options available: nationalisation, private sale or administration.
	Of course we recognise that, in practice, civil servants are not the best people to run a commercial bank. Professional management would have to be hired, and they would have to get to the root of what is going on at this bank. It might prove to be a very sound institution deep down, with a lot of very good assets; we do not know. However, if, having dug down, those managers establish that that is so, they can re-launch it in future years and there would be a substantial upside for the taxpayer that would not result from a private sale. On the other hand, they might discover that it is a can of worms—we do not know—and if so there will have to be a gradual run-off in what is a very difficult environment.

Jim Cousins: Is the hon. Gentleman's purpose in advocating nationalisation to enable Northern Rock to survive as a growing business—a locally based, locally headquartered company in the north-east, of which we have very few in the growing sectors—or simply to put the Government at the head of the queue of creditors to get their money out?

Vincent Cable: I very much hope that the first proposition is indeed realised. That would be the most desirable outcome, and it might well be possible to achieve it. Frankly, however, the Government have an overriding responsibility to protect the interests of taxpayers, who have put £30 billion into this bank already. These objectives are not fundamentally incompatible, but it will be difficult. There are precedents for such an approach succeeding, although not many. In the United States, the Federal Reserve took over Continental Illinois bank, which was in a comparable position. It was not done for ideological reasons; I think that a Republican Administration were in power. The bank was turned round and eventually sold, so there are precedents.

Philip Dunne: I recognise that the hon. Gentleman's preference, like ours, is for a private sale. However, in advancing his case for nationalisation over administration, what analysis has he done that leads him to suggest that taxpayers, whom he has just identified as the primary beneficiaries of either of these routes, would do better out of nationalisation—given that they would potentially be taking on all £110 billion of liabilities, plus redundancy liabilities that we have not even calculated yet—than administration, through which they are currently exposed only to £30 billion-worth of liabilities?

Vincent Cable: None of us knows exactly what would happen because none of us has been exposed to the details of the bank's position. The Bank of England will not tell us and we do not have the resources to carry out the due diligence on the company. There is, of course, the possibility, which I have just alluded to, of temporary nationalisation—as has happened historically and as occurred with a small national mortgage bank that was temporarily nationalised and resold very successfully under the Major Government. It was a small enterprise, but it did happen. The whole point is to provide some legal and institutional stability in the hope that, in the end, not only will the taxpayer be repaid but any increase in the value of the bank from its currently depressed market conditions will accrue to the taxpayer. That is the objective.

John Redwood: Why does the hon. Gentleman ignore the fourth option, which involves the Bank of England acting as a tough but fair bank manager with repayment schedules and proper cash-flow monitoring of the bank's progress? It would then be for the bank to work out whether it needed to put itself into a kind of voluntary run-off and do it in an orderly fashion or whether it could actually grow the business. Would that not be the best option?

Vincent Cable: It is partly what the Bank of England has been trying to do, albeit not very successfully. If the Bank of England were good at running a commercial bank as opposed to a central bank, it would have taken some elementary precautions like insisting on conditions for its loan, but it has shown itself to be incapable of doing that.
	My final point—I am conscious that other Members on both sides wish to speak—is that speed is of the essence. We are now in the position where the patient is in the operating theatre and, frankly, bleeding to death while the Government surgeon-general is sitting around saying that we need a full health check before anything can be done. That is not very sensible. Urgent action is required. I hope that I have made the case that public ownership is the least worst option. If it is, the Government will need to act very quickly and will need enabling legislation in order to do so. It is better that it is done now than in two months' time when the position may be infinitely worse.

Roberta Blackman-Woods: rose—

Vincent Cable: I am rounding off.
	Finally, there is a strong additional reason for wanting to park the problem of Northern Rock in the solution that I have described. There well be much worse to come. We may well have had the first of a tsunami wave with others behind it. We know what they are; we can see them. One of the problems that arises is that other banks—even very sound banks—are running into serious difficulties in raising capital from the markets. We know that there may well be a very nasty shock in the domestic property market. It is absolutely essential that the Treasury and the Bank of England are totally focused on how to deal with these emerging problems. At the moment, they are totally preoccupied with the problem of the Northern Rock bank, getting the wider problem of the emerging financial crisis completely out of perspective. The Government have failed so far, so they should pick themselves up from the floor, act quickly, take the bank into temporary public ownership and, we hope, limit some of the damage that has already been caused.

Kitty Ussher: I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
	"endorses the approach taken by the Government to Northern Rock to maintain financial stability, protect the interests of taxpayers and safeguard the position of depositors; welcomes the publication of a statement of principles underpinning the Government's response to proposals received by Northern Rock with regard to its future; acknowledges that Northern Rock has announced that it is continuing to explore a range of options as part of its strategic review; recognises that the Government continues to keep all options open in relation to the future of Northern Rock; and notes the Chancellor's assurance that he will keep the House fully informed of further developments with regard to Northern Rock."
	I am looking forward to the debate and particularly to the contributions of Back Benchers, but I thought it might be helpful if I made three main points. I shall talk about: first, the wider context to the events of the last few months; secondly, the current position with Northern Rock; and, thirdly, any lessons to be learned for the future from what has happened.
	The UK entered the recent period of turbulence in the global financial markets in a very strong position. The UK economy has seen 61 consecutive quarters of growth—the longest period since records began—and we are growing faster than any other G7 nation this year and will continue to grow next year.

Several hon. Members: rose —

Kitty Ussher: I will give way later, but not now.
	The banking sector also entered this period on the back of a period of rapid growth with well capitalised balance sheets. Both the UK economy and the banking sector remain strong.
	However, this has clearly been a testing time. The disruption to global financial markets that we have seen over recent months was triggered by problems in the US sub-prime mortgage market, as hon. Members will know. When the markets realised the extent of the problems in that market, they began to have doubts about the value of other asset-backed securities. Uncertainty about which institutions were exposed and to what extent meant that institutions lent to each other at much higher rates or not at all. The result was a large reduction of money in the market generally and an increase in the cost of borrowing not just for those with exposure to sub-prime mortgages, but for all institutions.
	In those circumstances, Northern Rock faced specific difficulties, not because of direct exposure to sub-prime mortgages, but because its business model depended on securing substantial sums from the securitisation and money markets. In September, it became clear that Northern Rock was having severe difficulty in accessing the financing that it needed and that it had no option but to go to the Bank of England. On 13 September, the Chancellor, on the advice of the Governor and the chairman of the Financial Services Authority, authorised the Bank to provide special liquidity support.

Geoffrey Clifton-Brown: Was not the real cause of Northern Rock's problem that whereas the Federal Reserve and the European Central Bank were pumping liquidity into the world's banking systems, the Bank of England sat back and did nothing, refusing in September to pump in any such liquidity?

Kitty Ussher: The hon. Gentleman is entitled to his view, but most people feel that the real problem with Northern Rock was that its business model was over-dependent on accessing and rolling over finance from the wholesale markets, which then dried up.

Stewart Hosie: The Economic Secretary's answer to the hon. Member for Cotswold (Mr. Clifton-Brown) was not wholly satisfactory. On 14 August, the Bank of England became aware of the credit crunch hitting Northern Rock. A month down the line, on 12 or 13 September, the Bank was still refusing to pump in extra cash, which is what the European Central Bank and the Fed did. Does the Bank of England not have some responsibility for the lack of liquidity in the market during that period, when everybody knew that the credit crunch was affecting Northern Rock?

Kitty Ussher: I refer the hon. Gentleman to the reply that I have just given. He is entitled to his view, but I believe that something fundamental about Northern Rock's business model led to its difficulties.
	We could, of course, have let Northern Rock go down, but that would have had serious consequences for the banking system, including likely knock-on effects for other financial institutions, in which confidence would inevitably have been shaken, and for the British economy.

Roberta Blackman-Woods: Does my hon. Friend accept that the comments made by the hon. Member for Twickenham (Dr. Cable), in running down the bank, will make it much more difficult to secure a viable future through the private sector for it?

Kitty Ussher: I am grateful for my hon. Friend's intervention. I have been slightly confused by the Liberal Democrats' comments throughout. On the one hand, they seem to want a sale to the private sector; on the other, they seem to want to nationalise Northern Rock in order to get that sale. However, I shall come to that shortly.

Philip Dunne: Will the Economic Secretary give way?

Kitty Ussher: I should like to make a little more progress, and then I shall give way.
	Our intervention was widely supported at the time, including by some who now imply that it was the wrong thing to do or who are now not prepared to accept the consequences of that support. All the lending that the Bank of England has provided is secured against assets held by Northern Rock, which include high-quality mortgages and securities. The Bank is the senior secured creditor. The Financial Services Authority has said, and continues to say, that Northern Rock's main asset base—its mortgage book—is strong and sound.

Philip Hammond: Will the Economic Secretary confirm that all the lending is secured by a fixed charge over such assets?

Kitty Ussher: All the lending is secured against the assets of Northern Rock. That is my understanding of the situation.

Alan Beith: rose—

Kitty Ussher: I should like to make a little more progress, and then I shall give way to the right hon. Gentleman.
	We have also ensured that the Bank's lending is subject to the normal conditions and controls for a creditor of our scale, to ensure that our interests are protected. In return for that facility, Northern Rock has agreed a number of controls, including not declaring, making or paying any dividend without the prior consent of the Bank of England, and not making any substantial changes to the nature of its business.

Philip Dunne: Will the Economic Secretary confirm that the security package includes Northern Rock's seller's share in Granite—in which case it ranks behind all the mortgages used by Granite to secure its securitisation issues?

Kitty Ussher: The assets against which the Bank of England's loan to Northern Rock was secured include a number of assets on its balance sheet, which themselves include the portion of Granite that is on the balance sheet.

Alan Beith: Has the hon. Lady seen a list of the assets, including the Granite element, which totals the full amount of the current Government-Bank of England lending to Northern Rock?

Kitty Ussher: I do not think it appropriate to embark on a running commentary on the number of assets on Northern Rock's balance sheet in relation to the lending that has already taken place. The crucial point is that the Bank of England's lending is secured against Northern Rock's assets.

Kevan Jones: Does the Economic Secretary agree that one of the priorities now is to ensure that Northern Rock continues to trade and keeps going at this crucial time? Contributions such as that of the hon. Member for Twickenham (Dr. Cable), which resembled Private Frazer's "We're all doomed", do not help either Northern Rock itself or the large number of people in the north-east who depend on it for their employment.

Kitty Ussher: I entirely agree. As I listened to the contribution of the hon. Member for Twickenham, it occurred to me occasionally that he might want a disaster scenario because it would make a better headline.

Susan Kramer: Will the Economic Secretary give way?

Kitty Ussher: I will press on, because I have some important points to make, but I will give way to the hon. Lady in due course. What I say next may answer the points that have been made so far.
	I know that there has been much interest in the amount of support that the Bank is giving. The Bank publishes its balance sheet every week, but—this is important—in common with other central banks it does not provide details of any specific operations, because it believes that doing so would undermine its ability to provide such support. A running commentary on any operations would be likely to have adverse effects that none of us would want—even, I hope, Liberal Democrat Members.
	As the House will know, as well as the support provided by the Bank of England there are the Government's arrangements to guarantee all deposits in Northern Rock, which will remain in place during the current instability in the financial markets. There is therefore no need for savers to take their money out, although of course they are free to do so. Those arguments were necessary, as I hope everyone will agree, and the guarantee will not be removed without proper notice being given to depositors. The Treasury has made it clear that that notice will be not less than three months.
	Together, the ongoing support of the Bank of England and the guarantee of deposits have given Northern Rock an opportunity to consider its strategic options for the future, and it has asked for expressions of interest in purchasing the business. As a major creditor the Government clearly have a direct interest in that process, and will therefore have to agree to any proposals for the future of Northern Rock. On 19 November, my right hon. Friend the Chancellor set out clearly to the House the principles against which such proposals will be considered.
	First, we must consider the interests of the taxpayer. The money that has been lent must be returned at an appropriate time and rate, and the Government will consider all options with a view to reaching the best outcome for the public purse. Secondly, we want to protect depositors. It is essential for us to do all that we can both to safeguard their interests and to maintain the service given to them. Thirdly, we will of course maintain wider financial stability. As the Chancellor has said, any outcome must also meet European Union state aid rules. The Government are happy to talk to any bidder that satisfies those principles.
	As Members will know, Northern Rock is taking part in accelerated discussions with the Virgin consortium, but says that it is not ruling out other bidders or alternative options. In answer to a specific question from the hon. Member for Twickenham, I can say that the Government are not paying the fees of the Virgin group. I understand that there is an arrangement between Virgin and the company to pay fees up to a specified cap.
	The hon. Gentleman argued that rather than those options being pursued, Northern Rock should be nationalised. As the Chancellor has made clear, we do not intend to rule any option in or out at this stage. But when the hon. Gentleman speaks of public ownership of Northern Rock as a temporary solution, he means that we should use it to try to find a private buyer, and that is exactly what we are already trying to do. As the Chancellor has said, we will of course continue to keep the House informed of developments.

John Grogan: Will my hon. Friend give way?

Kitty Ussher: I promised to give way to the hon. Member for Richmond Park (Susan Kramer). I will give way to my hon. Friend after that.

Susan Kramer: I thank the hon. Lady for giving way. Her last statement was almost too much. Does she not understand that in order to realise the full value of an asset, the timing and circumstances of the sale must be looked at, and that a fire sale is not the structure that realises the maximum for the taxpayer?

Kitty Ussher: I am not sure that we can make our position any clearer than we already have: we have set out three principles, the first of which is to protect the interests of the taxpayer and the public purse. That is what we seek to do, and we will look at all options in order to do it, as well as the other interests that we have expressed.

John Grogan: But have the Government set a deadline to secure a private sale, given that the liabilities are mounting day by day? If that does not prove possible, would not temporary nationalisation be preferable to administration? Have civil servants prepared a draft Bill to take through the House, should that be necessary?

Kitty Ussher: No, there is no specific deadline. We have asked the company to come back to us by February 2008; that was the date in the original discussions when we agreed to provide the stabilisation period. In response to the second part of my hon. Friend's question, we have not ruled any options in and we have not ruled any options out at this stage. As the Chancellor has said, we will continue to keep the House informed of developments.
	Let me turn to the third part of my contribution. It is clear that there are lessons to be learned from what has happened over the past few months. As we look to learn them, we will be guided by three important principles. First, the primary responsibility for managing risk is and must remain with individual financial institutions and investors. Secondly, that needs to be backed up by strong national regulatory frameworks. Thirdly, regulatory authorities in different countries need to co-operate effectively across borders. With those principles in mind, my right hon. Friend the Chancellor has set out our proposals for the international response to what has clearly been an international set of events, and we will continue to work closely on them with the financial stability forum and the International Monetary Fund.
	There are also lessons to learn at home, particularly from the fact that the existing financial services compensation scheme clearly did not have the desired effect of giving consumers the confidence they needed. As a first step, the Financial Services Authority has increased the coverage of the scheme to 100 per cent. of deposits up to £35,000, but over the past few months we have been asking whether further reforms to the scheme are required.

Julia Goldsworthy: The hon. Lady spoke earlier of the fact that the Treasury still had all options on the table. Can she confirm then that Treasury officials have drafted a Bill for the nationalisation of the bank, on the basis that that might happen?

Kitty Ussher: All options are on the table, and we are therefore taking appropriate actions to ensure that they remain on the table.
	I was talking about depositor protection. We have also been exploring possible options to reduce both the likelihood of bank failure and the impact of failure if it does nevertheless occur. Our initial discussion period on those issues closed last week, but we intend to consult on more detailed proposals in the new year and we will legislate on that matter next year, if necessary.
	At home and abroad, we are learning the lessons of what has clearly been a testing time. We are also continuing to work to resolve the situation with regard to Northern Rock. As I have said today, we have set out clear principles that proposals for Northern Rock's future must meet, and we will continue to assess proposals against them so that we can protect the interests of taxpayers and depositors and the wider financial stability. I have also said once again today that we are not ruling any option in or out at this stage, but that our preference is for the company to find a private buyer.
	Let me conclude by saying that I believe that providing support for Northern Rock was the right decision, and that it is right to see that support through.

Philip Dunne: Will the hon. Lady give way?

Kitty Ussher: No, as I am coming to the end of my speech. The alternative of letting Northern Rock go down would have had severe consequences for the banking sector and the wider economy.
	We have taken the appropriate action. I was glad that it had cross-party support at the beginning, and I hope there will be cross-party support for the Government amendment this evening.

Mark Hoban: After all the headlines and hype of the last few days, I had expected the leader of the Liberal Democrats, the hon. Member for Twickenham (Dr. Cable), to come to the House with a clear, well thought-through plan demonstrating what the purpose of nationalisation was, what would happen when the bank was in state control and what his exit strategy would be. However, we heard little to demonstrate that the nationalisation idea was anything more than a gimmicky headline—but we should, of course, have expected that from the Liberal Democrats. The hon. Gentleman is known to be nimble on his feet, but given today's performance, if he ever achieves his ambition of appearing on "Strictly Come Dancing" he would be all sequins and no steps.
	I also expected more of the Economic Secretary to the Treasury. Unless the Chancellor makes a statement before Christmas, this debate is all that we shall hear about the Government's position on Northern Rock, which is why we welcome the fact that the Liberal Democrats have secured an Opposition day debate on this issue. We had expected to be given a more substantive statement from the Chancellor before Christmas.
	My speech will make it clear that a number of unanswered questions remain. We know that taxpayers, Northern Rock's employees, the creditors, the bidders and the shareholders face uncertainty. The Economic Secretary's brief speech did little to clear up that uncertainty. She said little about how the sale was progressing. Equally worryingly, she said little about the Government's plans in the event that the sale falls through.
	Let me be clear that Conservatives want a rapid private sale of Northern Rock. We want a sale that safeguards the interests of taxpayers, maintains financial stability, protects consumers and, we hope, results in a bank with a viable future preserving valuable jobs in the north-east. Although we all share those aims, we cannot forget that we are in this crisis because of the Government's incompetence and mismanagement. Every problem in this crisis has been compounded by their dither and delay, and by confusion and chaos. Everyone accepts that the problems in the credit market are a global phenomenon, yet only this Government appear to be mired in a crisis of the magnitude of Northern Rock.

Alan Beith: The hon. Gentleman laudably expresses a wish that we should have a solution to this involving a private sale that satisfies all the concerns, including those of the north-east. Is he therefore arguing that the taxpayer should forgo some part of either the £30 billion that has been lent or the interest on that sum in order to make the sale possible if it proves difficult?

Mark Hoban: The Government, and the Chancellor when he gave evidence to the Treasury Committee—I shall come back to the words that he used in a minute—made it clear that we would get the money back. That is the commitment that the Chancellor made, and we want to hold him to account on satisfying it.
	The problem has become so bad that nationalisation is being discussed as a potential solution, but Labour Members should be in no doubt that nationalisation would be a signal of the Government's failure, rather than a triumph. Nationalisation has become an option only because of the litany of mistakes made by the Government: they failed to prepare for the problems in the banking sector, despite the advice of the Governor and the Financial Services Authority; they lacked leadership when the Bank became the lender of last resort; they were indecisive over guarantees; and they mishandled the sale process. We must ask ourselves every step of the way what the Government have done to get us into this mess.
	The first mistake that the Government made occurred when the Prime Minister—the then Chancellor—rejected the clear and unequivocal advice of the Governor of the Bank of England that reforms were needed to the rules on early intervention and deposit protection. During an interview with Robert Peston on last month's "File on 4" the Governor said:
	"I think we would have pressed even harder than we did, and we did press pretty hard, to inject some urgency into the need for new legislation to enable there to be a procedure for pre-emptive intervention in banks and the reform of deposit insurance."
	The Chairman of the FSA said in his evidence to the Treasury Committee,
	"we conducted a particular exercise with the Treasury and the Bank in February we had identified in particular the problem of having a means of dealing with banking problems and the need to deal with the question of bank insolvency problems and also the question of the compensation arrangements."
	Will the Minister tell the House what was done in response to that? Did the then Chancellor and the Secretary of State for Children, Schools and Families, who was then Economic Secretary to the Treasury, ignore that advice because it undermined the arrangements that they had put in place? Is this another example of the then Chancellor ignoring advice from outside his inner circle of advisers? When it became apparent that the credit markets were becoming tighter, what actions did the Treasury team take to examine the problems highlighted in February's exercise? Did they simply stand by and wait for things to happen?

Rob Marris: May I caution the hon. Gentleman and the Conservatives to be a little careful about being wise after the event and backing away from the wholehearted support that they initially gave to the Government's position on Northern Rock?
	Today's  Financial Times made clear the Conservatives' position in the middle of August. It said:
	"The Conservatives' economic competitiveness policy group...advocated....'We see no need to continue to regulate the provision of mortgage finance, as it is the lending institutions rather than the client taking the risk'".
	That policy commission's findings were widely praised by the Leader of the Opposition and by the shadow Chancellor, so I caution the hon. Member for Fareham (Mr. Hoban) about resiling from his party's former position and trying to be wise after the event. I urge him instead to continue the wholehearted support for the Government's policy. That is what leadership is about; it is not about ducking out when the going gets tough.

Mark Hoban: The hon. Gentleman misunderstands the nature of the report. It was a series of proposals for the party, not party policy. The party is on record at the time as saying that, so it is disingenuous of the hon. Gentleman to make that intervention.

Rob Marris: Will the hon. Gentleman give way, as he called me disingenuous?

Mark Hoban: I have to give way.

Rob Marris: I am grateful to the hon. Gentleman. Perhaps we can clarify the situation. The shadow Chancellor, in a speech to the Conservative party conference on 1 October, said:
	"The report from John Redwood and Simon Wolfson sets out how we liberate our economy to compete with the likes of India and China.
	Cut government regulation, planning restriction and red tape."
	On 20 August on the ITV1 lunchtime news, the Leader of the Opposition said that the report was the most impressive and comprehensive analysis of the state of the British economy produced by any political party and a "great report." Is that not the case?

Mark Hoban: At the time, we said clearly that it was a great analysis, but that we did not accept the policy recommendations it contained. My right hon. Friend the Member for Wokingham (Mr. Redwood) and Simon Wolfson made a good analysis of some of the problems in the British economy and they made some proposals for policy prescriptions. We did not adopt those prescriptions at the time, so they were not Conservative party policy.
	Let me return to the situation before the run on Northern Rock. It is ironic, in retrospect, that the private sector solution on offer at the time, from Lloyds, was vetoed by the Government because it would have involved the Bank lending money to Lloyds to enable it to take over Northern Rock. However, here we are now, a few weeks later, in a situation in which taxpayers' money will continue to fund Northern Rock once a private sector solution has been found.
	The Chancellor rejected that bid for Northern Rock, and the wholesale market dried up, so he then agreed that facilities should be provided to Northern Rock with the Bank of England acting as lender of last resort. The leak of the announcement of that policy on 13 September and the formal announcement the following day triggered the queues of retail depositors. Those queues were a clear signal to the authorities that retail depositors did not understand what lender of last resort meant. An action that should have reassured depositors panicked them.
	It is important to remember, in the context of London being a global financial services centre, that pictures of those queues were beamed right across the world. It could have a long-term impact on London's standing if prompt and decisive action is not taken following this crisis.
	The strength of our regulatory regime has hitherto been one of the key factors in London's success and is one of the arguments that we have been able to use to counter the pressure for greater regulation from Europe. It is vital that this crisis does not erode that standing, and the Treasury will need to work much harder in Europe to defend the strengths of the regulatory regime and put in place the right reforms to make regulatory supervision more effective.
	It is also important to recognise—and why the Chancellor's competence is now in question—that while the prospect of a run had been contemplated by the tripartite authorities, no plans were in place to reassure depositors. It appears that no plans were discussed until the queues formed. We know that over the weekend of 15 and 16 September there were discussions about whether retail deposits should be guaranteed to reassure depositors and stem the flow of withdrawals. Again, we know that the Governor had recommended that on the Sunday morning, but again the Government dithered. Remarkably, even on the very day that the guarantee was announced, No. 10 briefed at lunchtime that no guarantee would be on offer. By 6 o'clock, the Chancellor had decided to go for it. Again, there was dither and delay while an indecisive Chancellor made up his mind.
	As the Governor made clear in his interview with Robert Peston, the scope of the guarantee was not clear when it was announced. It was only in a radio interview the following day that the Chancellor announced that he had extended the guarantee beyond retail depositors. Having given the guarantee, the Government are now consulting on reform of the existing arrangements to find a permanent solution to the problem. If only they had responded to the advice of the Governor and the chairman of the Financial Services Authority earlier in the year. Even the reform and consultation have caused confusion. When the plans were first announced in  The Times, the Chancellor appeared to suggest that he wanted a scheme to cover deposits of up to £100,000. Now he is trying to back away from that figure, which shows yet more confusion in trying to deal with the aftermath of the problem.
	We must also recognise that any guarantee scheme is a backstop, and is not a substitute for improving the regulatory framework—whether through the tripartite arrangements or the monitoring of solvency. We need to ensure that the regulatory system seeks to reduce the risk of future banking failure rather than focusing on merely mitigating any failure.
	There are various estimates of the amount that the authorities have lent by acting as a lender of last resort. The hon. Member for Twickenham suggested £30 billion, while other reports have suggested £24 billion. The Minister said that she will not provide a running commentary on that analysis. However, can she clarify for the House and the taxpayer the assets on which the loans are secured? We understand that one tranche—about £11 billion—is secured on high quality mortgages of the type that the Bank would accept as collateral from other institutions. A second tranche has been secured on a more general pool of assets that the Bank of England would not have accepted as collateral had the Treasury not stepped in.
	Will the Minister confirm that there are two separate lines of credit—one from the Bank and the other, in effect, from the Treasury? How are those reflected in the Government's accounts? The House and the taxpayer demand answers to those questions. We demand clarity where there is currently uncertainty and confusion from the Government.
	We know—albeit only through the media and the Chancellor's later acknowledgment rather than because he said anything up front—that an element of the interest over and above the commercial rate has been rolled up, and that Northern Rock owes that to the Treasury. Will the Minister tell us how much that loan stands at? The taxpayer demands the answer to that question.
	When the money was lent, the Government were certain that it would be repaid and that the taxpayer was not at risk. The Chancellor said in his evidence to the Treasury Committee that the facility
	"is secured against collateral. We have also guaranteed various deposits...we fully expect to...get that money back."
	If that was not clear enough, the Prime Minister said to the House of Commons on 14 November:
	"Secured lending is being given in relation to Northern Rock, guaranteed against Northern Rock assets."—[ Official Report, 14 November 2007; Vol. 467, c. 660.]
	However, in his statement on 19 November, in words that were echoed by the Economic Secretary this afternoon, the Chancellor appeared to back away from the original cast-iron guarantee. He said:
	"Substantial sums have been lent, and that money has to be repaid at an appropriate time and rate. The Government will consider proposals with a view to reaching the best outcome for the public purse."—[ Official Report, 19 November 2007; Vol. 467, c. 961.]
	That is certainly not the guarantee we were given when he gave evidence to the Select Committee.
	We might ask why the Chancellor is much less certain now than he was in September. It is clear from the press reports about the two remaining bidders for Northern Rock that although a tranche of the debt will be repaid immediately the balance will be repaid over time. The timing and likelihood of repayment will depend on the new management's ability to rebuild Northern Rock's depositor base and their management of the mortgage book.
	Even the sale process has been mired in chaos and confusion. Last week, to keep the pressure up on the bidders, the Treasury was briefing the papers that the Conservatives had agreed to co-operate on the nationalisation of Northern Rock. That is to do with a Bill that is apparently not even drafted by the Treasury. However, we were not approached on that. We even wrote to the Chancellor of the Exchequer in September to offer to facilitate the passage of a deposit insurance scheme and the reform of the banking and insolvency rules. We have not had a response from the Chancellor of the Exchequer to that offer of support.

Kitty Ussher: Will the hon. Gentleman give way?

Mark Hoban: I shall happily give way. Perhaps the Minister will reply to some of the questions about the assets that are being used as a charge to cover the Government lending.

Kitty Ussher: On that specific point, the hon. Gentleman is aware, I am sure, that we are consulting on the reform of depositor protection and the insolvency regime for banks. That was, of course, mentioned in the Queen's Speech. Will he confirm now that he will therefore support any legislation that we introduce?

Mark Hoban: We said that we would facilitate the passage of any such legislation, but we need to see it first so that we can examine the reforms that the Government propose. We have offered that support but have had no response from the Government.
	I turn now to the speech by the hon. Member for Twickenham, who is no longer in his place. He did not say how he thinks that nationalisation would improve matters, or set out what he would do if the situation did not improve. He did not detail what his strategy for running the bank would be. Would he want to continue to accept deposits? In his speech today and in previous statements to the House and the media, he has been very critical of Northern Rock's lending practices. Would he want to continue to offer mortgages, or would he close down that aspect of the business? How would he manage the existing book of mortgages? Would he encourage prepayments, or would he roll them over? How much more money is he prepared to put at risk while Northern Rock is in public ownership? Those are all decisions that a nationalised bank and its owners—the Government—would need to make. The hon. Gentleman failed to set out a clear strategy for a nationalised bank. He may have captured the headline, but there is no substance to the soundbite.
	One thing is crystal clear—it would be a sign of monumental failure if the Government had to nationalise Northern Rock. It would be an indictment of their handling of the crisis. At every step of the way, the Government have demonstrated incompetence. The Prime Minister ignored the proposal from the Governor of the Bank of England for reforming the rules to do with early intervention and deposit insurance. The Chancellor failed to display leadership by not having a plan when it was announced that the Bank of England was acting as the lender of last resort. That triggered a run on Northern Rock, in the face of which the Chancellor dithered over whether to issue a guarantee to depositors. Even when he announced it, he was not sure what he had guaranteed. The Chancellor and his aides have sown doubt and confusion in the sale process, keeping options open but remaining unclear about what they are.

Rob Marris: I infer from the hon. Gentleman's remarks that his party thinks that nationalisation is not the way forward. Would he then be content for Northern Rock to go into administration, if the other options, including nationalisation, were ruled out or were not available?

Mark Hoban: The problem is that we have not heard from the Minister—and certainly not from the Liberal Democrats—what the strategy should be if the private sale fails. We want there to be a proper discussion of the options, but we would much prefer a private sale to go ahead. It is time for the Government to be much more straightforward about the options that they are considering, so that we can debate them. The House needs to know the Government's plan B if a private sale does not go ahead.
	No one is proposing nationalisation as a solution in itself. It can be no more than the route to a final solution, and anyone who proposes it must be able to justify the solution that it leads to.

Julia Goldsworthy: The Minister said that all options were on the table. Is the hon. Gentleman ruling out nationalisation at any point, even if it turned out to be the least bad consequence of the crisis?

Mark Hoban: I repeat what I have just said—that nationalisation would be a monumental failure and an indictment of Government policy. It would demonstrate that the Government had failed to manage the crisis properly. We hope that there will be a proper sale that will protect consumers and the interests of taxpayers. We hope that such a sale will maintain the financial stability of the system and preserve Northern Rock as a viable bank in the future.
	No one expected flashes of brilliance from the Chancellor, but the Northern Rock crisis—let alone the loss of half the nation's personal details and the botched capital gains tax reforms—has destroyed even his reputation as a safe pair of hands. For the past few months, we have seen dither and delay, chaos and confusion. When we needed leadership, he was indecisive; when we needed clarity, he was confused; when we need certainty about the safety of taxpayers' money, he is full of caveats and qualifications.
	Today's motion from the Liberals shows that all we have is a headline in need of a story, an argument that is half made, and an opportunism masked as the wisdom of age. We expect that from the Liberal party, but we expect something more from the Government. We are entitled to expect them to protect taxpayers' money, and to know how much of that money is at risk. Above all, we are entitled to know how the Government plan to resolve the crisis. Today, we are left with plenty of questions, but we are still to hear any answers.

Mr. Deputy Speaker: Order. I remind the House that there is a 10-minute limit on Back-Bench speeches.

Doug Henderson: I start with the Conservatives. The idea that if Northern Rock is forced into administration or nationalisation it is a disaster for Government policy is absolute nonsense. That is not an indictment of the Government; it is a market failure in dealing with a difficult situation in our banking system arising from weaknesses and faults in the American banking system. Let us have none of that nonsense. A real problem has to be faced and I expect a sensible Opposition to look at the real options and back them rather than try to make party politics from them.
	On the subject of party politics, the Liberal motion says that
	"the Chancellor chose not to recognise the importance of Northern Rock as a large employer in the North East amongst his principles for assessing Northern Rock proposals".
	That is absolute nonsense—absolute rubbish—and it is not just me saying that, as I shall explain.
	If the Chancellor had no commitment to the future of Northern Rock and its vital importance to the economy of the north-east and jobs in the north-east, why did he give the depositors guarantees and almost immediately provide loans for the business to keep it from insolvency in September?

John Thurso: Will the hon. Gentleman give way?

Doug Henderson: In a little while, but not at the moment—

Steve Webb: The hon. Gentleman has no answers.

Doug Henderson: I have plenty of answers and the north-east has plenty of answers for the Liberal Democrats—I can tell them that. I want to engage with one of those answers.
	The Newcastle  Journal is not renowned in the north-east as an anti-Liberal Democrat newspaper. On 20 November, which was well into the events at Northern Rock, the editorial in the  Journal—speaking on behalf of the people of the north-east—said:
	"The Chancellor did the right thing yesterday when he held true to the path he has taken since crisis engulfed Northern Rock...Of course, the approach has its critics, such as the hapless Vince Cable, whose posturing must embarrass Lib Dems in the region."
	It is unfortunate that the hon. Member for Twickenham (Dr. Cable) is not in the Chamber to hear what people in the north-east are saying. The hon. Gentleman has a reasonably measured demeanour when he is in the Chamber, but when he is in a television or radio studio, we hear headline grabbing, without a thought about his party's policy, or the consequences of his posturing not only on his party's effectiveness in the north-east but, far more important, on the economy of the north-east and the people of the north-east.
	The hon. Gentleman gave the game away during the debate, so it will be interesting to read the  Official Report tomorrow—I took a note. He was asked what would happen after nationalisation and his reply was clear. He said that none of us knows exactly what would happen. That was this afternoon—not half an hour ago. If the Liberal Democrats want to be a serious political party with serious policies about serious issues affecting people in the north-east, what sort of strategy is that? Not today, but at least four or five weeks ago, the Liberal Democrats made the main plank of their policy that the business should be nationalised. When the hon. Gentleman said that, he knew he could grab a cheap headline, as the Conservative spokesman pointed out, yet he does not know what the consequences of his policy would be.

Alan Beith: In that case, the hon. Gentleman owes it to the House to set out what will happen with a private bidder—presumably he knows. Will a private bidder be able to repay the whole of the debt to the taxpayer and ensure the continuance of a Newcastle-based Northern Rock?

Doug Henderson: That is an important question. I am not evading it and I shall come back to it.
	The hon. Member for Twickenham said he did not know what would happen if Northern Rock was nationalised. The small shareholders who live in my constituency know what would happen: they would be left high and dry with nothing, and there would be interminable arguments in the House about whether the Government should subsidise someone who takes a risk. I have spoken regularly to the workpeople over the past three months. The workpeople in my constituency—4,000 of them—want the business to be kept intact and they believe that the best way of doing so is to find a private bidder to work in partnership with the Government to secure the business's future.
	The other issue about nationalisation, rather than administration, is that under administration the Government's liability and the taxpayers' liability might be about £25 billion or £30 billion, but under nationalisation—I have looked at the figures carefully with people from the City—the Government's liability would be about £115 billion, and much of it would not be secured. That would be a disastrous policy to adopt.
	The Liberal Democrats have another issue to address. If a private bidder is not prepared to become involved in the business at this time, with the necessary banking support from the Royal Bank of Scotland, Deutsche Bank and Citibank, why should we expect that they would be after a period of nationalisation? I do not know what short term is in this context, but why should we expect that, after three months, six months, three years, or six years, the private sector is going to be any more prepared than it is now? That makes a nonsense of the position, as the workpeople and the shareholders have already recognised.
	The right hon. Member for Berwick-upon-Tweed (Mr. Beith) asked me about the way forward. There are no easy ways forward on an issue such as this. I have spent a lot of time talking to all the bidders about the detail of their options. I have spoken to the board of Northern Rock and other stakeholders. Realistically, all that can be done is for the Government to protect their back as well as they can with the loan finance that has been made available, to make sure that the depositors are safe—otherwise there is no chance of ever getting any more deposits in the business, either now or following restructuring—and to move forward gradually to try to reach a solution. I am told that that probably will not happen until January.
	The heat has to be put on those who now have a shareholding stake in the business. Some of the hedge funds have bought into the business and probably have an exposure of £150 million to £200 million. I expect that they would lose that if the business were nationalised. There has to be a dialogue between the Government and the Bank of England, and those bidders, on how a deal can be structured to allow the bidders to take over—albeit not unconditionally. The banks that are backing the bids will not allow any unconditional takeover to be made by either of the bidders. The Royal Bank of Scotland is not exactly naive about this sort of thing and it seems to be the lead bank on the syndicate of banks. It is going to lay down conditions that I believe have to be consistent with what the Government are looking for. If so, the shareholders have to make a decision, perhaps following advice from the board of Northern Rock, on whether, given all the circumstances, that is the best way forward.
	That is not going to be easy, but I hope that the situation can be addressed in that way, because that will be best for the workers, the small shareholders and the north-east. But I am not naive enough to think that we are bound to be successful. If we do not succeed, of course we will have to look at other ways of making sure that the bank has a future and that those who have a stake in the bank—the workpeople, the shareholders, the depositors and others—have a future. It is quite a long process, and it is unavoidable. I wish it were quicker, because the longer it goes on, the more of a drain there is on the business and the more insecurity is created.
	When the Liberal Democrats talk about the bank bleeding to death, as the hon. Member for Twickenham did this afternoon, they are not helping the situation. The hon. Gentleman is not helping to build confidence either in the north-east or elsewhere. I hope that the House rejects the Liberal Democrat motion and backs the Government on what people in the north-east know is the best way forward, and the only way forward at the moment.

Alan Beith: If we leave aside the party politics, there was a lot in what the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) said with which I entirely agreed. However, our objective is to try to ensure that the bank's circumstances can be protected in the future in better market conditions than those that will exist between now and the beginning of January, which is the time scale about which we are talking. For all the hon. Gentleman's passion, which I fully respect as I am well aware of the number of his constituents who are directly involved—my constituents are involved, too—we must face uncomfortable facts and make some difficult decisions.
	The collapse of Northern Rock has been a disaster for north-east England and, on the part of those responsible, a betrayal of the region's history and the great traditions of Northern Rock as an institution. The events have had such serious and traumatic effects on the region that there is understandable reluctance to face up to the uncomfortable facts of how they came about and what must happen now, if something is to be saved from the wreckage. There is an understandable desire to see a knight in shining armour coming to the rescue, but such knights as have appeared are not self-evidently in a position to repay the vast and unprecedented debts to the taxpayer that the company is piling up.
	Those with mortgages will not suffer—they will be comfortable—and those with retail deposits are unlikely to suffer, because this is the Government's problem, not theirs. However, the shareholders, including the small shareholders, will lose heavily whatever solution emerges. No one in the House would be prepared to advance any basis on which small shareholders would be protected from the consequences of what has happened. The big losers in the region will be those who work for Northern Rock, the many businesses that supply it, those who benefit from Northern Rock's sponsorship in the community and, significantly, all the good causes in the region that benefit from the Northern Rock Foundation, which owns 15 per cent. of the shares and got 5 per cent. of Northern Rock's profits.
	Why does the foundation exist? The official history of Northern Rock makes it clear that it was devised to persuade reluctant building society directors and members to support demutualisation. It was designed to persuade them that there would be a block of shares that would help to resist takeover by anyone from outside the region, and that the region would continue to benefit from the future success of Northern Rock. What an irony that that 15 per cent. shareholding now has little or no value and certainly will not be a blocking share to a takeover, which people in the region are now anxiously asking for. The events have had a wider impact on confidence in the region. The Government must realise that they could help confidence in the region in many ways that go beyond Northern Rock itself.
	The fundamental responsibility for what has happened lies with the directors, many of whom I know, who either failed to understand the dangers in the chief executive's strategy, or were just not willing to stand up to him. Many of us were worried by the speed of the company's expansion, but we did not know—although the directors must have known—that it was five times more exposed than any other UK bank to borrowing from the markets, relative to the size of the institution.
	There were clearly failings in the regulatory system, including due to the division between responsibility for regulation and the position of lender of last resort. The Prime Minister created that division when he was Chancellor, alongside his commendable action of giving the Bank of England independence over monetary policy, for which I had long argued, but it has proved, in this instance, to be an unsatisfactory division of responsibility.
	It can just about be argued, although I am not entirely convinced by the argument, that the run on the bank might have been forestalled by earlier injections of liquidity into the system by the Bank of England. However, we must bear it in mind that liquidity was exceptionally low at that time. I hope that the Treasury Committee will examine both that and the previous issue more closely.

Jim Cousins: Does not the right hon. Gentleman accept that the fatal thing that caused the run on the bank was the quite improper leaking of the news that the bank had gone to the Bank of England for a credit facility? The directors and employees of Northern Rock all feel a profound sense of betrayal about that leak. Sadly for the directors, they never recovered their leadership after that and the feeling of betrayal sent them off course. Does he acknowledge that that leak caused the damage?

Alan Beith: Yes, I do, although the lack of leadership of the directors goes back much further than that. However, the hon. Gentleman is right in the other part of what he said. I am still not convinced that the bank's position was sustainable, or that we can be certain that a run would not have happened, but the speed with which the run took place indeed resulted from that news bulletin deriving from that leak. Would we not all like to know how that came about and whether there was any motive on anybody's part that generated the leak?
	To return to what happened, if one drives round a blind corner at 80 mph and crashes into a broken-down bus, it is no use saying, "Somebody should have stopped me speeding" or "I didn't know there was a broken-down bus round the corner". That is essentially what the defenders of the bank's previous policy are saying—that the regulator should have stopped them having a bad business model, and that banks cannot be relied on to cater for unexpected circumstances. Banking is about managing the risk of the unexpected. That is what banks are for. What happened to risk management? Did it fail because Mr. Applegarth had a majority of executive directors on the risk committee?
	Then there is the squalid episode of the creation of the Jersey-based Granite Trusts, where Northern Rock parked its mortgage assets, supposedly to benefit Down's Syndrome North East. The association was completely unaware of its name being used and had not received a penny from the trust or network of trusts, whose real purpose was to facilitate the securitisation of the bank's loan book in terms intended to benefit charitable trusts. It transpires that other banks, including Halifax-Bank of Scotland, Standard Life and Alliance and Leicester, have all engaged in similar exercises, which may involve breaches of UK charity law or procedures.
	I hope the Charity Commission will look at this, and that the Government will review the law in this area. The irony is that Northern Rock's hard-working staff raised £40,000 for the Down's Syndrome Association by their own efforts six years ago, but the creature created in Jersey by the bank has not given a penny, so far as I know, to Downs Syndrome North East.
	The question that we must consider is whether the interests of the north-east are likely to be best served by waiting to see whether a saviour can be found who will repay the taxpayer's £30 billion and get the bank on a sound footing. That looks increasingly uncertain. The big danger is that the bank will be driven into administration, in which case the north-east's interests are not even in the queue for the proceeds of the resultant fire sale—and it would be a fire sale, selling into the market at a bad time.
	Or are people asking for the taxpayer to waive some part of the loan and the interest, perhaps as much as £10 billion, to give a potential buyer a better chance? If we start to say that we could do more to enable a private buyer to take over the bank, the only way in which that could be made realistic—everything else is being done at present—is to offer a lot more taxpayers' money to a particular private buyer to enable that to happen.
	For heaven's sake, if we can have billions of pounds of Government money to help the north-east, which certainly needs help, would we choose to put money on such a scale into a failing bank? What about all the other things that we need in the north-east, such as our infrastructure, the A1, fast rail links, schools, universities to build up our skills base, and new businesses? We have to ask whether that would be the best way to help the region, and note that it took not something about the north-east but a threat to London's banking system to drive those huge amounts of money out of London. Why is London, so to speak, sending so much money to the north-east? It is doing so because London's banking system, on which London depends, was threatened by what was happening at Northern Rock.
	The taxpayer is pouring into Northern Rock sums far beyond the wildest dreams of regional bodies, local authorities and the whole north-east business community, with no guarantee of getting more than a part of it back, no current interest payments, and precious little control over what is happening to all the money. That is why Northern Rock probably will be nationalised, and, if not, will probably go into administration.
	We probably ought to bite the bullet now, but in doing so we must recognise what the Government's principles failed to recognise—that the north-east has suffered and will continue to suffer from this disaster, and that the interests of the region must be one of the guiding factors in deciding how the business can be managed into a state where it can survive as a regional financial institution. That is what it was, before it was taken so recklessly into an aggrandising policy that has proved so disastrous. Frankly, to expect more than that—to expect to get more than a modest regional institution at the end of the day—would be unrealistic. Even now, no private bidder, realistically, looks able to promise that.
	We also need to ensure that the foundation survives. I hope that it will, and with wider participation from businesses in the region. At one time in London there was a 1 per cent. club of businesses that gave 1 per cent. of their profits to a charitable foundation. Here we have a ready-made charitable foundation, and I hope that more businesses in the north-east will see that it could belong to them in future. Whatever emerges from Northern Rock, it is unlikely to produce the yield for the Northern Rock Foundation that Northern Rock itself produced.
	It gives me no pleasure to say harsh things about what has happened to Northern Rock—still less does it please me not to be able to offer a comforting picture of a private participant coming in to rescue the business and meet all the conditions that we desire. I wish I could say that that would happen, but we are in a much more challenging situation.

Mr. Deputy Speaker: Order. I am afraid that the right hon. Gentleman's time allocation has been used up.

David Anderson: The last time that we debated this issue, a number of my colleagues and I were accused in the Tory press the following morning of being parochial. Perhaps I have got it wrong, but I thought that that was part of my job. I have not read the job description, but I think it is all right to be parochial.
	Last week, the House had a parochial debate about the road scheme around Stonehenge. The hon. Members for Salisbury (Robert Key), for North Dorset (Mr. Walter), for Somerton and Frome (Mr. Heath), for Bridgwater (Mr. Liddell-Grainger) and for Torbay (Mr. Sanders) and the right hon. Member for North-West Hampshire (Sir George Young) rightly argued their corners for their parts of the world. The right hon. Member for Berwick-upon-Tweed (Mr. Beith) has mentioned the A1. In any debate on transport and road structures, we would all argue strongly for the improvements that we want in our parts of the world. That is why we are here, and I feel no shame whatever about being parochial again. The argument is parochial, although it is also a national and potentially international argument.
	I want to start with the parochial impact on the work force. There are thousands of workers in the north-east in this very key sector—one that is not a traditional strength in our area but one that we want to build on. If that fails, the knock-on impact could be very serious.
	The trade union representing the majority of that work force has set up a charter of rights that it wants included in its discussions. It wants to be recognised as a stakeholder in the future of Northern Rock and to ensure long-term job security for its employees. It wants to protect and improve terms of employment for the employees and to improve and maintain existing pension rights.
	Clearly, the union wants the work of the Northern Rock Foundation to continue and the bank to stay a listed company. It is entering discussions with the private companies and saying, "These are the things that we want to work with you on." As far as I am aware, it is not saying to us or any other political party that it wants to discuss nationalisation. For it, nationalisation would simply mean that it had failed totally and saw no way out other than nationalisation. The union says clearly that it would like politicians to stop playing politics with our lives and asks people to stop talking down Northern Rock's opportunity to make its way out of its situation. I hope that Members across the House will listen to that.
	In my region, we are far too used to the realities of unemployment. Twenty years ago, the Conservative party was clear that unemployment was a price worth paying. The truth, of course, was that it was not paying it—but people in our part of the world were paying it in spades. We do not want to go back to those days—certainly not in respect of the people working at Northern Rock.
	I turn now to the Northern Rock Foundation. This is a parochial point, but an important one to ordinary people on the ground. I shall go through some of the things that the foundation is doing day in, day out, as it promotes social justice. It has invested £8.5 million in work with disadvantaged young people across the north-east; £8 million in regeneration; £8 million in schemes to help disadvantaged people to set up their own businesses; £6.5 million in tackling domestic abuse; £6.5 million in reducing crime; £4.5 million in helping people with mental health problems who do not get support from elsewhere; £4 million in helping people with debt problems; £16 million in the cultural renaissance of the region, including £1 million in the establishment of the Sage music centre in Gateshead, which is now among the world's state-of-the-art opera houses; £5.5 million in heritage projects; £6 million in advice and support to local charities and development of the region's voluntary sector; and nearly £5 million in providing training and development support directly to local groups.
	In my own constituency, the foundation has spent £15,000 to provide a live-at-home scheme for elderly people. Last week, I was fortunate to be able to go to their Christmas party with 100 people who, but for the foundation's support, would not be getting out of the house and enjoying this time of year. It has provided nearly £2 million to establish a domestic abuse rapid response service, £70,000 to a women's health project, and £120,000 to a young women's outreach project. Of course we do not want to lose that. It is a key thing in our region; we are very proud of it and want to hold on to it.

Sammy Wilson: I appreciate the list of good things that the hon. Gentleman has given to the House, but does all that justify committing the equivalent of the defence budget in taxpayers' money to propping up the bank?

David Anderson: I am glad that the hon. Gentleman asked that question; I was about to come to that. He is right to say that all those important things alone would not justify it, but they are part and parcel of what will not be there if we do not carry on trying to find a resolution.
	This is not just a parochial matter. The hon. Member for Twickenham (Dr. Cable) said that what happened was unprecedented and unexpected. It hit Northern Rock in a way that it should not have, and it hit other banks, but we did not intervene as a Government solely to protect Northern Rock but to protect the whole banking system. As the right hon. Member for Berwick-upon-Tweed (Mr. Beith) pointed out, it was about not only what was happening in the north but in this part of the world. The whole system was at risk, and we stopped that.
	It is clear that the Liberal Democrats are starting to bottle out. As usual, they have taken an opportunistic chance to make some hay while the sun shines—that is the way they work, and that is up to them. They talk about nationalisation. I spent my life working in nationalised industries—20 years in coal mines and 16 years in local government. I have a very different ideological view from that of my party's Front Benchers: their view is that public ownership is a good thing and we should have more of it. However, we should not have it only when things are on their knees. That is what happened in the past. In the post-war years, we nationalised the pits, the railways and the steel industry because we had to, because they had been run down and not looked after properly by the Government or the businesses that were supposed to be protecting them.
	Northern Rock may not be nationalised, but we should give a chance to the people who have stepped in and fulfilled some of the criteria put forward by people who work for the Rock and by the Governor. Virgin and Olivant have said in their bids—they must be tested; I do not have a problem with checking carefully what companies say before we sign up to it—that they will make up-front payments back to the Treasury on day one, give guarantees that the rest of the taxpayers' money will be paid back over two or three years, support the work force with guarantees of no compulsory redundancies, support the foundation, and protect mortgage holders and savers. They will also do what they can for the shareholders who, as Members on both sides of the House have said, need to understand the situation and bear the risk. Surely we should give the people who have come forward with a bid the opportunity to work with the bank and with the trade union, on behalf of the work force, to try to make this work.
	The Liberal Democrats have come forward with proposals that they think will grab a headline. We are used to that. The people of the north-east will see through what they are doing and will not forgive them for it.

Peter Tapsell: I agreed with the mover of this motion, the hon. Member for Twickenham (Dr. Cable), who has been such a very effective temporary leader of the Liberal party, when he stressed the great seriousness of the situation we are facing. He pointed out not just the tremendous tragedy for those people, mainly in the north of England, who are depositors and shareholders, but the seriousness of the situation for our banking system, which is part of this debate and which, as the Minister pointed out in her speech, is part of an international banking system.
	For the past 10 years, while the present Prime Minister was Chancellor, whatever question I asked him on any subject, he always prefaced his answer by pointing an admonitory finger at me and saying, in his usual genial way, "I want to remind the House that that was the hon. Member who spoke and voted against the Bank of England Act 1998, which has been such an enormous success." Having waited 10 years to reply, as unfortunately, unlike when I first entered the House, Back Benchers never get the chance of a second supplementary, I hope that the House will bear with me for a moment—rather a long one, I fear—while I read a bit of the speech I made on 11 November 1997:
	"The capacity to act effectively and in time as lender of last resort in a crisis...depends on the Bank's commercial intelligence system. The roles of prudential supervision and operational surveillance are closely linked, but they are not the same thing, and they are now to be separated, leaving the Bank with responsibility for operational surveillance but stripped of its powers for supervising prudential banking.
	Will the Bank continue to have the same day-to-day knowledge of everything that is happening in the banking world when its supervision staff are transferred to the new Financial Services Authority? I doubt it, although it will retain responsibility for the stability of the financial system as a whole. I therefore predict considerable buck-passing in the years ahead between the Financial Services Authority and the Bank of England when anything goes wrong. The Bank of England will say, 'We could not have known in advance that this would happen: we no longer supervise that institution, and the FSA never told us.' That will be a source of great trouble".—[ Official Report, 11 November 1997; Vol. 300, c. 761-62.]
	Well, so it has proved. The institutional root cause of the Northern Rock disaster lies in that separation of powers by the present Prime Minister.
	I happened to be in Tokyo when the news broke and, of course, any senior banker or businessman travelling abroad—I have spent a great deal of my time doing that—spends most of his time in hotel bedrooms watching CNN. I was absolutely amazed to see queues of people waiting to draw their money out of Northern Rock. I happened to be in Tokyo to visit various banks, including the Bank of Japan, and the people there were exceedingly polite and hardly likely to raise the matter with me. The fact is, however, that it did a great deal of damage to the prestige of British banking. That is perfectly clear.
	One of the people I visited while in Tokyo was the governor of the Bank of Japan when it went into its great financial crisis in 1985; he is an old friend of mine whom I have known for more than 40 years. He told me that he had to buy up the equity of almost all the leading Japanese banks. They were starting to sell that equity back at a considerable profit when I was there. It is worth noting, however, that it had taken them 15 years to reach a position where they could start to do that. We should not assume that this crisis over Northern Rock will be solved in a matter of weeks or months. It is going to take years to unravel.
	The scale of the so-called credit crunch problem has yet to be fully revealed, and we might end up with the world's major banks engaging in massive asset reductions. When Citibank, the largest bank in the world, has to borrow $7.5 billion from the Abu Dhabi investment fund at 11 per cent. interest, and has to offer that amount in convertible preference shares, it is a pretty serious situation. I was in Abu Dhabi when the then ruler, Sheikh Zayed, opened the new, rather modest, building to house the Abu Dhabi investment authority. Of course, it is now a building of almost unexampled magnificence, as Lord Curzon might have said. The fact is that Citibank is paying 11 per cent. for that money. We can just imagine the arguments that went on before it agreed to that rate of interest, which is more than double what the Fed was proposing as the present inter-bank rate in the United States.
	The most dangerous aspect of this situation is the growing reluctance of banks to lend to one another. Inter-bank lending is a crucial and essential part of the banking system. Also, the central banks are in danger of losing monetary control if, when the Fed and the Bank of England reduce their bank rates, the inter-bank rate rises. That is what has been happening, and it sends a very dangerous signal. There are historical parallels, including what happened in Japan in the 1980s. Excess competition in the banking sector led to a huge property bubble and ended in one of the longest recessions in history. Japan is still technically in recession, 15 years later, and its interest rate is 0.25 per cent.
	The resignation of a few prominent chief executive officers, accompanied by huge golden handshakes, will not satisfy public opinion. The fact is that we face a grave international situation. The largest bank in the world, Citibank, is borrowing billions of dollars at 11 per cent. This means that money power has moved out of western hands and into those of Russia, China, India and the middle east. Have I only got 17 seconds left? I cannot solve the world's financial problems unless I am given another half hour.

Mr. Deputy Speaker: Order. I commend the hon. Gentleman on his timing.

Jim Cousins: There were two important points in that last contribution—among the travel adverts. One was that this problem in Northern Rock is going to take some years fully to resolve, and a certain amount of patience is going to be required to resolve it. The other was that the Northern Rock problem is a problem not just for one small English region, but for the whole British financial community and for London's standing in the world. It would be sensible to bear both those points in mind in dealing with this issue.
	Today, five central banks, including the Bank of England, have announced that they will work together on ways of putting far more cash into the international banking system. That will only increase the growing anger in places such as Newcastle, Sunderland and Durham about this whole situation. If the same arrangements that were announced today had been in place four or five months ago, the Northern Rock collapse would not have occurred. There might still have been problems at Northern Rock, but the collapse would not have occurred. There is a far bigger problem out there than Northern Rock itself, and one bank in the north of England has now become a scapegoat for a much wider set of problems.
	In August, the Governor of the Bank of England presented himself to us as the hard man who would face the markets down. Where is that policy today, and where would Northern Rock and the City of London have been if his judgment of the situation at that time had been rather better?
	When we come to questions of judgment, we must also look at the contributions made on this issue by the hon. Member for Twickenham (Dr. Cable). Northern Rock is now trying to rebuild its deposit base. It is advertising attractive savings at attractive rates, which is the proper thing to do to rebuild that base, and it is trying to retain its existing deposit base by offering incentives to some of the savers who have stayed with it. What does the hon. Gentleman say? What did he say this very afternoon in this place? He said that the workers are doing no work, and that the default rates at Northern Rock—they are one of its real market strengths, and they give its workers not just a great deal of pride but market value in the financial sector—were not genuine. Previously in this House, he described the mortgage practices of Northern Rock as being
	"little short of a...scam."—[ Official Report, 11 October 2007; Vol. 464, c. 468.]
	All these statements are profoundly unhelpful in resolving this problem. They are extraordinarily damaging to the workers and savers at Northern Rock.

Kevan Jones: I listened in horror to some of the things that the hon. Member for Twickenham (Dr. Cable) said, as well. Did it not also alarm my hon. Friend that the hon. Gentleman did not provide one shred of evidence to back up some of his outrageous statements?

Jim Cousins: There were shreds of evidence, but not shreds on which one would build the kind of case that the hon. Gentleman was making. I also draw attention—this is a very important point—to the hon. Gentleman's very negative comments about the preferred bidder that Northern Rock has selected.

Steve Webb: One thing that my hon. Friend the Member for Twickenham did say that could be tested against the factual record is that the bank is today lending up to 125 per cent. of the value of a property, near the peak of the housing market, on four or five times people's earnings. Does the hon. Gentleman think that that is wise practice today?

Jim Cousins: I come back to this point. One of the real skills built up by Northern Rock's workers is making mortgage lending available to the lower end of the income scale and making those mortgages work in a sustainable way. So far, the published record indicates that the bank has been very successful in doing that. That set of skills is of enormous value to our current housing market and it would be sensible not to downgrade those skills and destroy that reputation, which would make that work impossible.

Julia Goldsworthy: rose—

Jim Cousins: I will give way, but I hope that the hon. Lady will acknowledge my situation.

Julia Goldsworthy: I am grateful and I will be brief. Does the hon. Gentleman agree with Citizens Advice, which highlighted this issue today, saying that many people on low incomes are taking on too much debt and that the banks should be acting more responsibly? That was raised as a general issue.

Jim Cousins: But it is precisely that general underlying point—a sound one—that reinforces the value of Northern Rock's lending practices in being able to make lending available to workers on lower incomes and to make it work on a sustainable basis. Northern Rock's default rates were among the lowest of the big mortgage lenders—a point that needs to be repeated time and time again, because it is part of the real hidden value in the Northern Rock business, which must not be thrown away for nothing in our debates.
	The hon. Member for Twickenham also sought—I return to the point—to downgrade the preferred bidder. He referred to Richard Branson, the gentleman who runs the Virgin consortium. I freely acknowledge something that is not widely known—that the name Virgin has everything to do with tax and very little to do with sex. It is a reference to the British Virgin islands, which were the original tax location of that particular business. All that is fair stuff and fair copy. That is why the hon. Member for Twickenham should have acknowledged the significance of the Government's requirements, set out clearly in a letter of 25 November, which is available to the House. It states that
	"returns on equity investments made by members of the Virgin Consortium and other holders of ordinary shares must be restricted until the public sector loans have been paid back with interest and all other public sector commitments are at an end."
	That was a requirement set out by the Government on 25 November and it has been accepted by the preferred bidders. These are important points to bear in mind; we must not write down the value of this business.
	Now we come to the question that I asked the hon. Member for Twickenham in an intervention: what is the point of nationalisation? Is it to secure Northern Rock's future as a growing business, headquartered in the north-east? The hon. Gentleman was not very clear in his answer, but the real answer appears in his motion, which refers to
	"temporary public ownership as the only action that will guarantee the loans are paid back in full as soon as possible at the lowest risk to taxpayers."
	It could not be clearer that the purpose of nationalisation is to put the Government at the head of the queue of creditors in getting their money out. Those are the worst possible conditions in which to be considering the bank's future. That is a profoundly irresponsible policy. It is nationalisation for fire sale and nationalisation for break-up. Nationalisation for sustained recovery and growing on the business would be a different proposition, but that is not the proposition that the Liberal Democrats are putting forward.
	I return to the heart of the matter. The north-east of England does not want to exist for ever as a welfare-dependent region. My hon. Friend the Member for Blaydon (Mr. Anderson) pointed out that we have in Northern Rock an important business, in a growing part of the British economy, headquartered in our region, which few big businesses are now, whose lending practices have been a success. That is part of the new economy of which the north-east of England wishes to be part. The Question before the House is: how do we secure the future of Northern Rock, so that it can play its part in the wider recovery of the north-east economy? If Northern Rock goes down or is broken up, made bankrupt or run off, as the right hon. Member for Wokingham (Mr. Redwood) mentioned, that would be a disaster for the north-east. It would do psychological damage to the north-east, just as the first Thatcher recession did between 1980 and 1981. Yet that is the hidden meaning of the policy of nationalisation that has been put before the House today. It must be rejected.
	There is a wider point, however. If Northern Rock goes down—broken up in a fire sale, nationalised with the Government putting themselves at the front of the queue of creditors—that will do enormous damage to the City of London's reputation not only in this country and Europe, but throughout the world. That is not a policy that can be contemplated. How will the Government deal with other banks in order to make arrangements for the run-off of sub-prime mortgages, of which Northern Rock has very few, if they are themselves the owner of a bank? It is a ridiculous—

Madam Deputy Speaker: Order. The hon. Gentleman's time is up.

Philip Dunne: It is a pleasure to follow the hon. Member for Newcastle upon Tyne, Central (Jim Cousins), given his experience of the circumstances surrounding Northern Rock on his constituents. I should like to focus on the Government's decision making throughout the process and conclude with some comments on nationalisation, following up on what the hon. Gentleman said.
	It is clear that the origins of the crisis extend way beyond this country and the confines of Northern Rock, and lie in the difficulties in global credit markets and the inability of Northern Rock in particular to achieve its regular securitisations in order to provide funding. However, the problem was identified in January this year by the FSA in its remarks on the state of credit availability and the implications for liquidity around the world. They were also endorsed by the Bank of England in its quarterly review in April, yet individual financial institutions in this country were slow to react, to put it mildly.
	Northern Rock continued with, and in some areas even increased, its pace of lending, increasing its share of the mortgage market in the first half of the year to 20 per cent. There are many reasons for that, which we could go into. It is fitting that we are having this debate on the day when Northern Rock is being removed from the FTSE 100 index, to mark its demise from its previous position in our financial services sector. The business model was clearly flawed, and the executives in the bank were carried away, partly as a result of their lack of experience.
	Northern Rock's board appeared before the Treasury Committee, and it is notable that the chairman, who was acknowledged not to be a banker and who had quite properly offered his resignation to the senior non-executive when the crisis struck, has been replaced by somebody else who is not a banker. He has recently been non-executive director of a major bank, but his entire career was spent in the oil industry. The chief executive of the bank, who was responsible for the rapid growth in its lending, is still there, as we heard earlier. The chairman of the audit committee—the same person as the chair of the risk management committee—who oversaw the explosion of lending was the only member of the board who was a recognised banker. As emerged earlier today, he was Sir Derek Wanless, the man who was appointed by the Prime Minister to review the finances of the national health service.

Charles Walker: A track record of success.

Philip Dunne: A curious track record, although I believe that his role in banking preceded his role in advising Government.
	When the crisis hit, how did the Government react? They reacted through the tripartite arrangements that had been established by the Chancellor as Chief Secretary to the Treasury 10 years ago, and by the present Prime Minister when Chancellor. It is now clear as day that the tripartite arrangements had not been stress-tested when they were put in place, and it was therefore not at all clear how decisions would be made, and by whom, during a crisis. That fundamental uncertainty about where responsibility lies and decisions are made in the depths of a crisis lies at the heart of the Government's reaction to this crisis and some of the false moves that they have made. The first real test of the tripartite arrangements has failed.
	In her chronology of events, the Economic Secretary omitted the first key decision that the Government got wrong in the crisis. The Chancellor failed, in fact, to make the right decision over the offer for Northern Rock that was on the table from Lloyds TSB.

Colin Breed: I know that hindsight is an inexact science, but will the hon. Gentleman offer a view on whether it might have been better to lend £30 billion to Lloyds TSB or to Northern Rock?

Philip Dunne: That is precisely the point that I was about to make. With the benefit of hindsight, it is undoubtedly clear that had the Government decided to advance the facility to Lloyds TSB, it would have done so on terms that would have been commercially more attractive to the bank. That would have meant that the bank would not have had to pay the penal rate of interest that is causing part of the problem to the profitability of the remaining part of Northern Rock. I shall say more about that shortly.
	Much has been made of the fact that what was on the table was not a firm proposal. Indeed, the Chancellor told the Treasury Committee that there was no firm proposal. However, my research makes it clear that Northern Rock ran a competitive bidding process among institutions that might have been in a position to make a bid, that the process began on 20 August, and that by Friday 7 September Lloyds TSB had concluded that it would proceed with an offer, but only on condition that the Government facility of £30 billion was made available at LIBOR flat, a commercial but not penal rate of interest. That offer would have been via a scheme of arrangement, a court procedure, and would therefore not have been conditional on shareholder consent, which would potentially have frustrated the bid.
	The offer was there. It was not completely unconditional, but had the Government accepted it, confidence would have been provided for Northern Rock's funders and much of the present mess would have been avoided. Had a different decision been made it would undoubtedly have attracted political flak at the time, and there would have been difficulty, but it would have been nothing compared to what we have now.
	The next piece of indecision from the Government occurred when someone—it is not certain who, but the finger of suspicion clearly points towards the Treasury, as the hon. Member for Newcastle upon Tyne, Central suggested—decided to brief the BBC on the extent of the problem surrounding Northern Rock on Thursday 13 September. The lender of last resort facility was announced the following day. A decision was made to leak some information—I am not accusing the Chancellor directly, but someone made the decision—and the next day, when the announcement was made, Northern Rock made a statement about its financial prospects. The failure on the part of Government was that no joint decision was made by the parties involved, the three members of the tripartite arrangements and the company. Nor was the decision made at the same time to extend the deposit guarantee, as has been referred to. Had both guarantees been announced together, and had there been a common statement from those concerned, considerable confidence would have been given to the market, we would not have had a run on the bank, and we would not be in the mess we are in. Furthermore, it now seems that the Government were taking all these decisions about critical aspects of market practice without any external advisers. Goldman Sachs was appointed only a week after the guarantee was provided. That is another example of poor decision making at the heart of Government.
	The next poor decision was the security package that the Treasury and the Bank of England negotiated for their facility. The Bank of England is a bank so it understands security and it appears that it took security over the best assets available, which is good for the Bank of England. The Treasury is not a bank and did not take such good security. What package of security has the Treasury taken? The Economic Secretary gave us a clue; it seems that it does include the seller's share owned by Northern Rock in the mortgage collateral within Granite. The seller's share is, I believe, £7 billion of the worst tiering of security within the Granite structure, which effectively means that if the Granite mortgages start to default that will come out of the Government's security package first—in other words, it is the weakest form of security.
	What will happen if either of the current offers are pursued? It will be interesting to hear from the Economic Secretary in her winding-up speech what security the Bank of England and the Treasury will be encouraged to surrender. Will they share in the risk with the bidding group, or will—as would be more normal practice—new money coming into the business require priority in security, in which case the Government would be left with even lesser quality assets?

Philip Davies: My hon. Friend is making a thoughtful speech. Does he agree that it is difficult to know what is the best future for Northern Rock unless the precise terms of the arrangements of the Bank of England and Treasury loans are disclosed?

Philip Dunne: That would be helpful not only to those of us who are trying to understand what has gone wrong, but to the bidders to get some idea of the details of the security package.
	As my hon. Friend the Member for Fareham (Mr. Hoban) said, the Chancellor has confirmed that taxpayers' money is safe and will be repaid. That puts the Chancellor's position and credibility firmly on the line in the context of the Northern Rock situation and its resolution. I very much hope that taxpayers will receive all their money back—that is the outcome we all want—but it is hard for me as a former banker to see how that can possibly occur. While the chairman of the Financial Services Authority confirmed yesterday to the Treasury Committee that he regards Northern Rock as solvent, that is due only to the Government facility, since it has not been able to meet its debts as they fall due since mid-September, which is why it went to the Bank in the first place. We now know from the Economic Secretary that the security package includes Northern Rock's residual share of the mortgage held in Granite, ranking behind £48 billion-worth of security, at the last count, in Granite. It is composed of unsecured lending and home-equity release mortgages, which are the UK equivalent of sub-prime mortgages. It also rests on a portfolio of traded securities—some £15 billion according to the last balance sheet we saw—issued by others. Given what is happening in the credit environment and to the valuation of traded securities around the world, whether that is of par value is somewhat doubtful and an open question.
	Let me conclude on nationalisation and pick up on Members' observations on that. Nationalisation is not a solution that protects the taxpayer. It could do so only in the event of benign market circumstances and over a prolonged period, with the bank being run as a business in competition with every other financial institution that is in the mortgage business around the country by a Treasury that, frankly, is not equipped to do so. It is highly unlikely that those circumstances will prevail. The other circumstance in which it might possibly work is as a facilitation of a back-to-back deal with a private sector purchaser. As I pointed out in an intervention, nationalisation places the Government in the position of being a 100 per cent. equity owner responsible for meeting all £110 billion of liabilities that might fall due. Is that a responsibility that the Liberal Democrats really want the Government to undertake?

Quentin Davies: I do not know how much light this evening's debate has been able to throw on the problems in the inter-bank market or the problem of Northern Rock. It has shed a lot of light on the state of the Front-Bench teams of the Conservatives and Liberal Democrats. Once again, it has shown that the Conservatives have no original ideas. As has become blatantly apparent this evening, they are not even prepared to answer their own questions. They are in the business of saying contradictory things to different people, of gesticulating in different directions, and of hinting that their policy line is one thing and then, when that becomes inconvenient, simply saying that it was not party policy when it was stated after all. We have seen through them this evening.
	The Liberal Democrats, who called for this debate, have also shown that they are all over the place, even though they have a concrete proposal in the form of nationalisation—it is surely the wrong one. It makes no sense for the hon. Member for Twickenham (Dr. Cable) to say that he is extremely worried about the exposure of taxpayers' money through the Bank of England deposits with Northern Rock and a second later to say that he thinks the taxpayer should not just have the deposit risk of a defined amount of money, but should take on the equity risk too by nationalising the bank. That equity risk will not only be the existing equity risk, because, as has been pointed out by the right hon. Member for Wokingham (Mr. Redwood), who made a sensible intervention for once, future liabilities in the form of redundancy liabilities and so forth can crystallise subsequently.
	The hon. Member for Twickenham said two other odd things this evening. One was that there has not been a comparable banking collapse since Creditanstalt in 1931. A range of banking collapses have occurred since then—there were a number in the 1970s involving the secondary banking crisis. One such collapse happened to London and County Securities bank, which had as its director at the time Jeremy Thorpe, then leader of the Liberal party. It is little wonder that the hon. Gentleman does not want to remember that one. That situation had to be solved by the famous lifeboat, which turned out to be a successful support operation. The leader of the Conservative party is even more ignorant than the temporary leader of the Liberal Democrats, because he said, at Prime Minister's questions, that there had not been a comparable bank crisis or run on a bank for 140 years. He was even further from the mark than the Liberal Democrats are.
	Another extraordinary thing took place. The hon. Member for Twickenham knows quite a lot about economics, but he allowed himself to be completely seduced into demagogy of the most irresponsible and superficial kind this evening. He started comparing £30 billion-worth of deposits placed by the Bank of England with Northern Rock—if that is what the real figure is—with the cost of high-speed trains or hospitals. He knows as well as anyone, and perhaps better than most, that if one buys high-speed trains or hospitals, one loses the cash because it will have been definitively given away. If one places money on deposit with a bank, one has it there. Unless any further write-offs, in addition to existing provisions on the book of Northern Rock, prove to be more than the value of the equity, all the deposits will be repayable, and it is inconceivable that more than a very small proportion of those would be the target of subsequent provisions. The hon. Gentleman knows that. He was merely trying to play to the gallery and to be demagogic when to do so is thoroughly irresponsible.
	What should we do in this situation? The Government are doing the right thing. It was right for the Bank of England to intervene, because that is what lenders of last resort are for. It would be disastrous to have a banking collapse when the inter-bank market is in a considerable psychological crisis, and we are right to prevent that from happening. We should continue with the present arrangements—that may be for much longer than next February, and that does not matter—until we can find a suitable trade sale. Ultimately, if that did approach not work, we would have to opt for administration.
	I hope that the Government bear one point in mind: the enormous moral hazard involved if there were any attempt—I am sure that the Government would not be tempted to do this—to bail out shareholders. That would be wrong. They bear the equity risk of the business and they would have been the beneficiaries had the high-risk strategy of funding the bank up to 70 per cent. on the inter-bank market worked, so they must take responsibility for that strategy that their management adopted. We cannot have the moral hazard of shareholders in that situation being bailed out, otherwise every bank will think that it can adopt the highest-risk strategies, whether on the asset side or the liabilities side, because if it works they will get the reward and if it does not, the taxpayer will pick up the tab. The result of that would be corruption of good banking standards throughout the country.
	I welcome today's important news that the regulators and lenders of last resort here in the European Union and in the United States have got together to provide liquidity for up to three months for the world banking system. What we need in this crisis is exactly what the Government have displayed—calmness, strong nerves and consistency. It is clear that the only Front Benchers displaying those qualities tonight are my right hon. and hon. Friends.

Julia Goldsworthy: I had hoped for a greater welcome in the House for this debate, because this is the only opportunity we have had since the issue blew up to discuss points that so many hon. Members from Newcastle and the surrounding north-east area have raised about what should happen to the employees of Northern Rock. The Conservative Front-Bench spokesman said that his party had called for a statement on the issue, but that would not have allowed a full discussion. As my hon. Friend the Member for Northavon (Steve Webb) said, the fact that the Conservatives did not even feel it necessary to table an amendment that could have outlined some of their views shows how little they have to contribute.
	Today has been an opportunity to raise wider issues about the run on the bank and allow parliamentary time to discuss, and possibly express our preference for, some of the options on the table. Whatever the final outcome, it is clear that there will be a human cost to this episode, although the Minister explicitly did not mention that in her remarks. It was raised by hon. Members with constituents who work for Northern Rock, and we heard some valuable contributions from my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith), and the hon. Members for Newcastle upon Tyne, North (Mr. Henderson), for Blaydon (Mr. Anderson) and for Newcastle upon Tyne, Central (Jim Cousins), who rightly raised the uncertainty that the staff face. We do not wish to criticise that uncertainty and we share their pain, but they face a difficult and challenging future whether a private buyer takes it on, or the bank goes into administration or is taken into public ownership.
	We cannot expect a private buyer to be Mother Theresa or a knight in shining armour. There are difficult times ahead, and our argument is that taking the bank into temporary public ownership would be a way to provide some stability and a platform for progress. If hon. Members have any criticisms, they should be for the people who devised Northern Rock's business model, which, the Minister acknowledged today for the first time, had a major role to play in the downfall of the bank. However, I would ask who was responsible for supervising that business model and who set up the circumstances that enabled it.
	The focus of the anger of all the hon. Members who spoke so passionately about the effects on their constituents should be Adam Applegarth and the board of directors who so aggressively pursued an expansion plan that relied heavily not on retail deposits—the heritage of the bank—but on borrowing on the wholesale markets. Those hon. Members should also be angry with the Government for setting up the tripartite arrangement.
	The hon. Member for Louth and Horncastle (Sir Peter Tapsell) raised the issue of what happened when the Bank of England was made independent. However, the issue that he raised was not to do with that, but with who took on oversight of the banks. Perhaps if that had stayed with the Treasury, the tripartite arrangement might have been slightly clearer. Early warning signs were not picked up and acted on and the legislative framework was inappropriate. There was a delay in guaranteeing deposits, which stoked public concern, and some of the responsibility, ultimately, has to go back to the Government.
	Of course, the impact will be felt far more widely than simply in the north-east and among the beneficiaries of the Northern Rock Foundation and employees of Northern Rock. Every single taxpayer has made a commitment. Labour Members said that it is about putting the Government first, but it is actually about saying that the taxpayer should be put first.
	 It being Seven o'clock , the debate  stood adjourned.
	 Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),
	That, at this day's sitting, proceedings on the Motions in the name of Dr Vincent Cable may be proceeded with, though opposed, until a quarter past Seven o'clock.— [Alison Seabeck.]
	 Question agreed to.

DEFERRED DIVISIONS

Motion made, and Question put forthwith, pursuant to Standing Order No. 41A(3)(Deferred  d ivisions),
	That, at this day's sitting, Standing Order No. 41A (Deferred divisions) shall not apply to the Motions in the name of Mr Secretary Hain relating to Pensions; Mr Jim Murphy relating to the Funding of Political Parties; and proceedings on the Motions in the name of Dr Vincent Cable.— [Alison Seabeck.]
	 Question agreed to.

NORTHERN ROCK

Question again proposed, That the original words stand part of the Question .

Julia Goldsworthy: I was talking about the impact on taxpayers of the Government loan of some £30 billion. That equates to a loan from every taxpayer in the country of £820. Again, that is only an assumption, which we can make because the Bank of England publishes its balance sheet. We have not had explicit information from the Treasury on the terms of the loan or the amount of money that it expects to loan—either up until now or in the future.
	People have a right to know the extended terms of the loan. I ask the Minister to state explicitly the security. Is it based on the fixed or floating assets? If she can give a clearer answer than she did earlier, I shall be grateful. What can she do to ensure that people are reassured that the Government will seek full repayment of the loan as soon as possible and that a clear time frame will be set out? That information has been far from forthcoming and needs to be provided. Ultimately, if taxpayers are providing this money, they have a right to know that information.
	Of course, it has been a tough time for shareholders, too. Many small shareholders benefited by becoming shareholders when Northern Rock demutualised in 1997, as has been mentioned, and they own about 25 per cent. of Northern Rock's shares. As always, there is a risk in trading stocks and shares. Financially, it is more— [ Interruption. ]

Madam Deputy Speaker: Order. Will hon. Members who have just come into the House please keep the conversation low?

Julia Goldsworthy: The shareholders are also taxpayers. If the average shareholding for a small shareholder is about £600 and the average tax contribution is £800, they are still net out of pocket. Their anger should be directed at those people who were delivering the business model.
	It is worth pointing out that the majority of shareholders are hedge fund traders, who do not invest in the long-term security. They invest in the short term, which does nothing to benefit the long-term viability of the bank. For many people, and potentially for the wider economy, there have already been significant consequences of the run on the bank. That raises two fundamental questions. Have lessons been learned, and could the Government have done anything better? There has been some acceptance of failure in the tripartite arrangements and in the regulatory framework. The Government sought to address some of that in the Queen's Speech.
	However, there are key issues where the Government still deny that there has ever been a problem. We just need to look at the loan. The Government are not following the principles laid out in their legislation on credit and savings that mean that the terms of the loan need to be laid out clearly. There has been no public debate on the interest rate, on how punitive it is, on how it has changed and on how it compares with the inter-bank lending rate. There has been nothing on the security of the loan.
	Another key area of failure has been the Government's delay in reaching an agreement on a private sale. The longer the debate goes on, the more public money is invested in Northern Rock and the less likely it becomes that there will be a viable takeover by a private organisation at the end of the process. Will the Government accept that they are undermining the viability of a private sale? Will they accept that they are in an incredibly weak negotiating position? Essentially, they are taking part in a poker game where they are showing their opponent the cards and playing with an unlimited number of chips provided by the taxpayer.
	Every week that goes by, the crisis is costing the taxpayer more money, there is less chance of a proper recovery, and it becomes more probable that the bank will have to end up in public ownership. The position is unsustainable, and that is why we say that the Government must bite the bullet. The least worst option is to take Northern Rock into temporary public ownership, with a view to selling it off later. That would surely be better than the proposition—which the Conservatives seem to support—that the Government would write unlimited blank cheques merely to avoid the dogma involved in taking the bank into public ownership. In fact, the tales of Rolls-Royce or the public mortgage bank that was referred to earlier show that the Conservatives have a record on these matters.
	Finally, why is the problem so urgent? All the options are on the table, but the Government must act quickly. If the bank has to be taken into public ownership, that has to happen quickly, perhaps over the recess, and that is why we suggest that enabling legislation should be brought forward now. Will the Minister who winds up the debate confirm that her officials have drafted that legislation, on the assumption that it will be needed sooner rather than later?

Angela Eagle: As my hon. Friend the Economic Secretary made clear at the start of the debate, Northern Rock faced specific difficulties earlier this year because of its reliance on securitisation and money markets for substantial amounts of funding. That funding then became more expensive and therefore more difficult to obtain.
	In September, it became clear that Northern Rock was having severe difficulty, and it was left with no option but to turn to the Bank of England. The Chancellor, on the advice of the Governor of the Bank of England and the chairman of the Financial Services Authority, authorised the Bank of England to provide special liquidity support.
	At the time, both the Leader of the Opposition and the shadow Chancellor supported the decision. The right hon. Member for Witney (Mr. Cameron) was quoted by  The Daily Telegraph on 16 September as saying:
	"We support wholeheartedly the action that the Bank of England and the Financial Services Authority are taking to provide liquidity to Northern Rock."
	On 20 September, the hon. Member for Tatton (Mr. Osborne) told Channel 4:
	"The guarantee put in place on Monday night was necessary, given the position we found ourselves in then."
	It was the right decision to offer support to Northern Rock, but that support must be seen through. It cannot be right to support the action taken by the Government "wholeheartedly" because it is "necessary", but then run away from the consequences as soon as the going gets tough. That is what the Conservatives did, and it shows that they are not fit to form a Government.
	The hon. Member for Fareham (Mr. Hoban) opened for the Opposition in the debate, but he was very touchy about his proposal for mortgage regulation. As those of us who read its report will remember, the economic competitiveness policy group had just advocated the total deregulation of mortgages, which the Leader of the Opposition welcomed as "impressive", "successful" and "fantastic". However, that no longer appears to be Conservative policy.
	The hon. Member for Twickenham (Dr. Cable) has shown that leadership appears to have gone to his head. He had a wonderful time with his speech: he described one of the private sector consortiums seeking to buy Northern Rock as "vulture investors", called the Governor of the Bank of England impertinent and said that Richard Branson was engaging but had a criminal record. He added that Northern Rock was bleeding to death, in a bid to frighten anyone interested in keeping their money in the bank or in helping us to provide a solution to what is an extremely difficult problem. I shall restrict myself to observing that, by saying as much, he is not helping.
	The hon. Member for Twickenham said that there was a great deal of urgency about the need to tackle the problem, but then spent 40 minutes saying how urgent we had to be. We look forward to the new leader of the Liberal Democrats taking over next week, when we will be able to describe the hon. Gentleman as "Mr. Has-Bean".
	I want to spend a bit of time explaining the principles behind our support for Northern Rock, which has given the bank the opportunity to consider its strategic options for the future. First, the Chancellor has made it clear that the interests of the taxpayer must be protected. I know that it is a matter of concern for hon. Members that substantial sums of money have been lent that must be repaid at an appropriate time and rate. The Government will consider all options with a view to reaching the best outcome for the taxpayer. Other things being equal, we shall view favourably proposals that minimise any residual Government involvement or funding from the public sector.
	Secondly, we want to protect depositors. It is essential that we do everything we can both to safeguard their interests and to maintain the service provided to them. We shall view favourably any proposal that minimises disruption to the service provided to Northern Rock's customers. We expect proposals to include plans for communication with customers.
	Thirdly, any proposal must maintain wider financial stability. We shall, therefore, assess proposals to ensure that they will result in a substantial long-term capital structure that meets the tripartite authority's stability and policy objectives, and that there is a viable medium-term business plan. As my hon. Friend the Economic Secretary said earlier, the Chancellor has told the House several times that any outcome must meet European Union state aid rules. Any proposal for Northern Rock's future must meet the principles I have just set out, and it would have to be approved by the Government.
	I turn to the process of identifying a buyer— [ Interruption. ]

Madam Deputy Speaker: Order. There are far too many conversations in the Chamber. Members who have been here throughout the debate want to hear the Minister's response.

Angela Eagle: Thank you, Madam Deputy Speaker.
	As Members know, Northern Rock has asked for expressions of interest in purchasing the business, and has announced that it is taking forward discussions with the Virgin consortium on an accelerated basis. Let me be clear, however: no options are being ruled in or out at this stage.
	The hon. Member for Ludlow (Mr. Dunne) made great play of the supposed proposal to buy Northern Rock that was rejected in August. In fact, there was no firm proposal on the table but, as the chairman of the FSA said, there was an exploratory inquiry whether the Bank of England would be prepared lend an institution about £30 billion at commercial rates. Referring to the so-called offer, Sir Callum McCarthy told the Treasury Committee:
	"I think it would be incorrect to regard the private sector solution as being a firm, cut and dried offer, it was still at an exploratory stage and there were a number of other issues which would have to be dealt with."
	There was no offer for the bank in August.
	Neither the Government nor the Bank would normally provide commercial lending of up to £30 billion for a going concern. Such a loan would be subject to approval by the European Commission.
	The Liberal Democrats have suggested that we should nationalise the bank. As Treasury Ministers have made clear on a number of occasions, no option is being ruled in or out at this stage. However, I think all Members agree that a proposal from a private buyer that meets the principles we have set out would be the best option, and our preference is for the company to find a private buyer. When the hon. Member for Twickenham talks about nationalisation as a temporary solution, he must mean that we should try to find a private buyer. That is exactly what we are attempting to do.
	I conclude by returning to the central issues of the debate: whether the Government should have provided support to Northern Rock, and how we should move forward from the current position. The alternative to the Government's authorising the Bank to provide support to Northern Rock was to allow the company to fail. I do not recall any Member of the House arguing for that option at the time, although now that the going has got tough some of them appear to be running away from the consequences of the guarantee they supported. The House should be assured that the Bank of England's lending is secured against assets held by Northern Rock, and that the FSA continues to say that Northern Rock's main asset base—its mortgage book—remains strong and secure.
	It is of course in everyone's interests that the situation with regard to Northern Rock is resolved as soon as possible, but it is also essential that the public interest is protected and that any proposals for Northern Rock's future meet the principles that the Chancellor has set out: protecting the taxpayer, protecting depositors and maintaining wider financial stability.

Paul Burstow: rose in his place and claimed to move, That the Question be now put.
	 Question, That the Question be now put,  put and agreed to.

Question put accordingly, That the original words stand part of the Question:—
	 The House divided: Ayes 60, Noes 304.

Question accordingly negatived.
	 Question, That the proposed words be there added,  put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—
	 The House divided: Ayes 290, Noes 222.

Question accordingly agreed to.
	Mr. Deputy Speaker  forthwith declared the main Question, as amended, to be agreed to.
	 Resolved,
	That this House endorses the approach taken by the Government to Northern Rock to maintain financial stability, protect the interests of taxpayers and safeguard the position of depositors; welcomes the publication of a statement of principles underpinning the Government's response to proposals received by Northern Rock with regard to its future; acknowledges that Northern Rock has announced that it is continuing to explore a range of options as part of its strategic review; recognises that the Government continues to keep all options open in relation to the future of Northern Rock; and notes the Chancellor's assurance that he will keep the House fully informed of further developments with regard to Northern Rock.

PENSIONS

Resolved,
	That the draft Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2007, which were laid before this House on 20th November, be approved. —[Liz Blackman.]

EUROPEAN COMMUNITY DOCUMENTS

Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9) (European Standing Committees),

Funding of political parties

That this House takes note of European Document No. 1159/07, Draft Regulation amending Regulation (EC) No. 2004/2003 on the regulations governing political parties at European level and the rules regarding their funding; and agrees that the Government should support its adoption. —[Liz Blackman.]
	 The House divided: Ayes 336, Noes 159.

Question accordingly agreed to.

PETITIONS

Post Office Closures (Wirral)

Ben Chapman: I am presenting this petition on behalf of some 2,000 residents of Spital, who have signed it to mark their concern about the closure of their local post office. It is a well-used and important element of a vibrant community and serves a broad range and number of people who rely on its services and proximity to their homes. The nearest alternative service is a considerable distance away, which presents problems for many of the customers. The signatories hope that their local post office is allowed to continue to play its vital community role.
	 Following is the full text of the petition:
	 [The Petition of Mr Temple, Postmaster and the customers of Lancelyn Court Post Office,
	 Declares that the proposal to close the Post Office will have a disproportionate impact on the community it serves due to the large proportion of elderly people who rely on the service; the existing and new developments near to the Post Office which are designed to hold over 100 pensioners and an additional number of disabled people, and the fact that the development had surely been planned with the convenient location of Lancelyn Court Post Office in mind; the extent to which other traders in the Village rely on people coming to the Post Office; the infrequent bus service serving the nearest alternative Post Offices; the busy road it is necessary to cross in order to reach the first alternative Post Office (which has no parking facilities) and the descent and climb necessary to reach the second alternative Post Office.
	 The Petitioners therefore request that the House of Commons urges the Secretary of State for Business, Enterprise and Regulatory Reform to review urgently, with the Post Office, the policy of branch closures with a view to maintaining Lancelyn Court Post Office.
	 And the Petitioners remain, etc. ]
	[P000060]

Boston Bypass (Lincolnshire)

Mark Simmonds: I wish to present a petition, signed by 11,500 people, on behalf of the residents of the borough of Boston and the Boston bypass pressure group.
	The petition states:
	The Petition of people of Boston and the Boston Bypass Pressure Group,
	Declares that they are dissatisfied with the short-term road strategy proposed by Lincolnshire county council for Boston and want a major road scheme to allow traffic to flow around, and have access to, the town centre, to ease the appalling congestion and prevent damaging economic and environmental impacts upon Boston.
	The Petitioners therefore request that the House of Commons urges the Secretary of State for Transport to give recognition to the needs of the failing road infrastructure of Boston and South East Lincolnshire; and further urges the Government to make Boston a special case for investment to improve the social, environmental and economic conditions of the town.
	And the Petitioners remain, etc.
	[P000075]

Post Office Closures (Merseyside)

Joe Benton: I present petitions, which I support, to the House on behalf of approximately 4,000 constituents with regard to the proposed closure of the Aintree road and Daleacre drive post offices in my Bootle constituency. Post Office Ltd appears to have disregarded Government guidelines on the closure of urban post offices in these two cases, and these petitions request the intervention of the Secretary of State for Business, Enterprise and Regulatory Reform.
	 Following is the full text of the petitions:
	 [ The Petition of those affected by the closure of the Daleacre Post Office in Bootle,
	 Declares that the relevant area plan proposal gives no reasons or justification for the closure of this Post Office and merely refers to sets of statistics i.e. population, car ownership etc., which on their own are meaningless. The Post Office Ltd. should extend the consultation period to allow for a proper consultation to take into account all the social factors of the area including the pensioner population and  e ffects on local businesses compared to other Post Offices in the area,  to  which there is no reference in the area plan proposal.
	 The Petitioners therefore request that the House of Commons urges the Department for Business, Enterprise and Regulatory Reform to make representations to the Post Office Ltd. to extend the consultation period and hold a meeting with a delegation of representatives from the community.
	 And the Petitioners remain, etc.
	[P000080]
	 [The Petition of those affected by the closure of the Aintree Road Post Office in Bootle,
	 Declares that the relevant area plan proposal gives no reasons or justification for the closure of this Post Office and merely refers to sets of statistics i.e. population, car ownership etc., which on their own are meaningless. The Post Office Ltd. should extend the consultation period to allow for a proper consultation to take into account all the social factors of the area including the pensioner population and  e ffects on local businesses compared to other Post Offices in the area,  to  which there is no reference in the area plan proposal.
	 The Petitioners therefore request that the House of Commons urges the  Department for Business, Enterprise and Regulatory Reform to make representations to the Post Office Ltd. to extend the consultation period and hold a meeting with a delegation of representatives from the community.
	 And the Petitioners remain, etc.
	[P000081]

Farepak

Jessica Morden: I present this petition of more than 1,000 signatures on behalf of Deborah Harvey. She is one of my constituents and a former Farepak agent who has campaigned long and hard for justice for those affected by the company's collapse. The petition
	requests that the House of Commons urges the Prime Minister to speed up the process of paying money back to the affected customers before Christmas this year; and further urges that if any culpability is found against any of the directors of Farepak that action will be taken and will he ensure that previous honours bestowed to them, if any, will be removed.
	And the Petitioners remain, etc.
	 Following is the full text of the petition :
	 [ The Petition of those affected by the collapse of Farepak,
	 Declares that the collapse of Farepak in October 2006 caused 122,000 people to lose their Christmas savings; that many families suffered financially and emotionally from that loss; and that they deserve reimbursement. Furthermore, it has been over a year since the collapse of Farepak and it is unlikely, according to the administrators, that any money will be paid back to its customers by Christmas this year.
	 The Petitioners therefore request that the House of Commons urges the Prime Minister to speed up the process of paying money back to the affected customers before Christmas this year; and further urges that if any culpability is found against any of the directors of Farepak that action will be taken and will he ensure that previous honours bestowed to them, if any, will be removed.
	 And the Petitioners remain, etc. ]
	[P000082]

M25 Noise Pollution

David Gauke: This petition relates to the widening of the M25 and the concern of a number of my constituents living close to it that inadequate steps are being taken to reduce noise pollution. As a resident of Chorleywood, which is near the M25, I declare that I am affected by this.
	The Petition of residents of Chorleywood and others from the constituency of South-West Hertfordshire and others,
	Declares that a large number of homes which are very close to the M25 near and between Junctions 17 and 18 suffer from considerable noise pollution from the motorway and that the forthcoming widening of the M25 will exacerbate this problem.
	The Petitioners therefore request that the House of Commons urges the Secretary of State for Transport and the Highways Agency to take effective measures to reduce the level of noise produced by the M25 near and between Junctions 17 and 18, including the provision of low noise surfacing of the motorway and effective noise-absorbing fencing.
	And the Petitioners remain, etc.
	[P000084]

ASSISTED REPRODUCTION SERVICES

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Alan Campbell.]

Ian Gibson: I wish to put into context a few remarks about assisted reproduction. It is indeed a large-scale subject, which could take hours and days to go through, but several issues are important, particularly in respect of some of the legislation being introduced after the Christmas break. We have to consider some of those issues.
	Let me put the subject in context first. Figures published yesterday by the Office for National Statistics show that the population of the UK is growing at the highest rate since the 1960s and that total fertility rates have risen since 2001 from a record low of 1.63 children per woman to 1.84 children per woman in 2006. Indeed, it is interesting to note that they are now at the highest levels since the 1980s. In the 1980s and 1990s, the fertility rates of women in their 20s were actually declining. Since the 1970s, as more women have entered higher education and the labour force they have been increasingly delaying reproduction into their 30s or 40s and this has led, I think, to a greater need for assisted reproduction. That seems to correlate with the demand for assisted reproduction.
	The rise in fertility over the past five years, as reported by the statistics unit of the ONS, is a result—it says—of a large increase in immigration from abroad, as well as the increased support for child care and the maternity legislation introduced, of course, by the Labour Government. The ONS points out that some 20-odd per cent. of births were to people who were born abroad. There is some argument about that and its relevance, but it implies that immigration can develop fertility rates in this country to a higher level. That has yet to be shown over a period of time.
	The general trend in Britain towards a declining birth rate is mirrored in western Europe. Several factors, such as lifestyle factors, an increase in sexually transmitted diseases and a rise in obesity, as well as environmental factors involved in urbanisation and urban lifestyle that affect fertility, have led to a rise in male and female sub-fertility. There are also socio-economic factors, which have allowed couples, as I say, to delay having children. Lack of affordable housing, flexible and part-time career posts for women, and affordable and publicly funded child care have contributed to those low fertility and birth rates.
	Couples are delaying starting a family, which has led to a decline in fertility levels due to ovarian ageing and related reasons that have led to a reduced chance of conception. Other factors include tax increases, changes in national insurance and so on, but the main thing I am trying to point out is that the reproductive rates and the need for assisted reproduction are reflected in wider events in our society.
	However, I do not want to talk only about reproduction and social issues; I want to spend some time on the issues of scientific service and assisted reproduction treatments. I have a feeling that unless we are careful, the debate on the Human Fertilisation and Embryology Bill will get taken over by a lot of bioethical issues, as we saw in the recent debate in the Lords, and we will end up talking about regulation, rather than considering the new scientific endeavours that are coming forward. Of course we must debate bioethics—no one is against that—but I want to talk about assisted reproduction and some of the things that are happening.
	We talk about in vitro fertilisation, but in practice assisted reproduction is more than that. It includes all fertility treatments—ovulation induction, interuterine insemination and gamete intrafallopian transfer, as well as IVF. There are various ways to add eggs and sperm together to allow the conception of a child, yet we regulate only IVF. We do not consider whether the other ways of developing an embryo should be regulated. That is quite obvious in the Bill, which is lacking in that those other technologies are not considered. I guess we think that IVF will be the only treatment in the future. Because of that, we worry about the welfare of the children and about the need for a father—all these issues are being debated—but what about the welfare of the woman and the effects of treatments on her? For example, ovarian stimulation, whereby women are, in my opinion, overdosed with vast amounts of hormones, is being shown to be quite unnecessary. A single dose of a hormone or a reduced level can be just as effective in producing eggs and, at the end of the day, the embryo.
	In the regulation of assisted reproductive technologies, medical practices, laboratory practices and new technologies and research are all regulated by the Human Fertilisation and Embryology Authority, which has concentrated on those areas. There are inconsistencies in clinical protocols, the uses of drugs, dosages and practices. People, particularly women, are confused about the gross inconsistencies in clinical practices and they feel vulnerable. I think that the entire service should be delivered within the NHS, but I am not going to say that people are being forced into the private sector, to pay astronomical sums of money to receive any of those treatments, many of which have certainly not been scientifically studied or undergone proper clinical assessment.
	In my opinion, the Healthcare Commission has been efficient in regulating and monitoring clinical practices, looking at clinical complications, including morbidity and mortality, and taking effective action where necessary. Perhaps the Healthcare Commission should regulate IVF medical practice, with advice from the National Institute for Health and Clinical Excellence, the Medicines and Healthcare products Regulatory Agency and the royal colleges. We need an efficient and accessible clinical watchdog, but that is not proposed in the Bill at all. We are talking about legislation to deal with assisted inception involving IVF treatment, which is the mainstream clinical treatment, but we need a watchdog—a Government or parliamentary body—to address how it should be assessed and funded. Joining two bodies together seems to have been rejected, with a single body being put forward. We need to debate that. All those issues will have to be discussed in the debate on the Human Fertilisation and Embryology Bill, but I have my worries that that will not happen.
	My further worry is that people will tag on amendments to the Bill about abortion. I am quite prepared to stand and argue about the principles of abortion for days and days, as are other people; but if we are not careful, abortion will be tagged on to the debate through amendments and take it over, meaning that the issues that I am raising will not be reflected in the good legislation that all sides recognise we need, in terms of the outcomes of research and so on.
	We also want a clear and comprehensive presentation of information to the wider public. Term live birth rates should be a measure of success rates. League tables are published in  A Patient's Guide, but I think that it contains misleading information, and that detailed information about clinical trials should be included. Information about complications, morbidity and mortality rates per clinic should be published, not just success rates. The public need to know all that as well. It would be good if reports followed up what happened to the women involved and their children at different stages in their lives, but we do not have much information about that either.
	I think that if we are not careful, we will not get through all the issues that will be discussed when the Bill is debated. We will spend a great deal of time discussing all the ethical and moral issues surrounding the decision of same-sex couples to have babies, and we will also be expected to try to discuss abortion, which will be quite impossible. I think—and I hope the Minister will comment on this—that either a Joint Committee or a House of Lords Committee should consider abortion in its own right, taking account of all the evidence that is presented. I do not mean just scientific and medical evidence, but evidence dealing with the moral and ethical aspects. A House of Commons Committee was established, but examined only the scientific aspect. The issue should be seen as a whole in the context of the society in which regulations will be implemented.
	Will patients be charged for eggs? Will fees be charged for individual cycles? Will three cycles be necessary, or will one be sufficient if less hormone is needed for stimulation purposes? I initiated a debate on the issue in Westminster Hall a few months ago, when my right hon. Friend the Member for Doncaster, Central (Ms Winterton) was the Minister responsible for public health. I think she considered the points that I made, and I should be pleased to hear whether there have been any developments in relation to reduction in the use of hormones which, in my opinion, seriously affect embryos and women's health. I believe that smaller doses could produce equally high success rates.
	That leads to the question of the number of embryos that are being implanted. We want only one to be implanted; we do not want multiple births and all the concomitant problems that may arise. According to Scandinavian countries, current technologies can be quite successful in developing a single embryo that proves healthy and able to bring satisfaction to people's lives. People want to have children, or to continue to have them, but for various reasons—which I have outlined—cannot have them. It is possible that infertility is more rife than it used to be.
	I want to say a little about survivors of cancer, particularly young people who receive severe treatment and whose ovaries may be damaged if it continues for a long time. It is their choice, or that of their parents or loved ones, but I think there should be a way of determining whether the sperm and egg should be stored for use in later life, after they have recovered. We had a ceremony today involving CLIC Sargent, which is involved in such cases. Thankfully many young people have recovered—survivorship is the name of the game for young people with cancer now—but many have been severely affected at one stage in their chemotherapy treatment, and the treatment may have damaged their eggs or sperm. We need a mechanism to ensure that if they want assisted-reproduction techniques to be applied to their sperm and eggs, those techniques are available. I do not think that such issues are entirely reflected in the Bill.
	Many people have drawn attention to the continuing problem of postcode prescribing. The way in which primary care trusts operate the technologies varies greatly—they are available in some areas but not in others—and I think we need a proper analysis of the position. We hear about drugs, but we should know more about the technologies. I am excited about all the new possibilities, and the way more people are being give the right to have children. However, when we are drawing up a human embryology Bill, we should ensure that it reflects all the developments that are taking place out there. We should not nit-pick when it comes to technologies. We should not regulate some and fail to regulate others. Hopefully we will not regulate some of them; self-regulation may be possible. However, I doubt that very much, when we still have strong private sectors in the health service and we are coming from a situation where assisted reproduction is still costing those who are rich and can afford it lots of money and other people cannot afford it and cannot have the treatments. That is a real challenge for the Government and these issues will come to the fore during the debate on human embryology. We must talk about it fully, and not just nit-pick. I speak as somebody who chaired the Select Committee that dealt with this issue, and who has the scars on my back to prove it. I also served on the Joint Committee. Everyone thought it was an interesting area to discuss, but they felt disquieted afterwards that many issues had not been touched on. I hope the Minister will pick up on that and be able to say whether we will be able to do a good job or an excellent job.

Dawn Primarolo: I congratulate my hon. Friend the Member for Norwich, North (Dr. Gibson) on securing the debate, which is on a subject of great concern to many people in all our constituencies. May I begin by making a few remarks on his comments on the Human Fertilisation and Embryology Bill, which is currently being discussed in another place? It provides not only for in-vitro fertilisation to be regulated, but for donor insemination and artificial insemination to be regulated, and it has recently been extended to cover the regulation of donor sperm services provided through the internet. The remit of the regulations for fertility treatment was considered by scrutiny of the draft Bill in a Joint Committee of both Houses. In responding to the report, the Government took note of the strong arguments that had been put.
	Although the Bill is not the subject of the debate, may I remind my hon. Friend that its main provisions are to ensure proper regulation of all human embryos that are outside the body, whatever the process used in creation? It is also about the regulation of embryos created from combined human and animal genetic material for research. It will make sure that there will continue to be a ban on sex selection of offspring. It recognises family and social support and the best interests of the child. It also makes alterations by lifting some of the restrictions on collected data to make it easier to do follow-up research. May I also remind my hon. Friend that abortion is not included within the scope of the Bill and that that will be a matter for this House?
	My hon. Friend also touched on the important question of the services available now through the national health service for those seeking fertility treatments. Since becoming the Minister for public health, I have, as we would expect, received letters from people who cannot have a child and find that their local primary care trust cannot help them immediately. In some cases, their PCTs have said that they cannot help them at all. Those letters express the distress people feel in that situation—the impact of finding out that their family will not happen as planned, and in many cases the sense of being let down by the national health service.
	My hon. Friend referred to a postcode lottery in prescribing. There are of course many other people who do receive NHS fertility services, and I hear far less from those people, as we would also expect. Even so, those receiving IVF treatment are unlikely at present to be receiving up to the three cycles of IVF as set out in the National Institute for Health and Clinical Excellence guidelines. I have made it clear in this House that I am concerned about this inequitable access to IVF, and I have no hesitation in saying today that we need to address that. In a moment, I shall update the House, and my hon. Friend in particular, about the further steps being taken.
	My hon. Friend spoke with a great deal of feeling about the ways in which we could look at assisted reproduction treatments differently, encouraging lower doses of drugs and ensuring that all the treatments are regulated in the best possible way. The Bill's proposal is precisely to undertake that. I would be pleased if he were to write to me in detail, if he feels able, about the particular points and concerns that he is raising.
	More generally, clinicians and others may have evidence about particular treatments, including new ones. The Department of Health has asked clinicians who favour minimal assisted IVF to give evidence directly to the National Institute for Health and Clinical Excellence. In progressing this approach, it must be made clear that where clinicians and others have evidence about treatments, which may be new or not commonly practised, it would be helpful if such information was made available to NICE. In 2008, NICE will be assessing whether its fertility guideline needs to be updated and, if so, to what extent. It is right that it should have the information in order to take that decision. I implore my hon. Friend to follow that approach.
	Having acknowledged that access is inequitable, I am developing a programme of work to improve the way in which NHS IVF services are provided. My hon. Friend touched on that issue. Because of the differences, and to try to ensure continuity, we are funding the leading fertility patients' support organisation, Infertility Network UK, to work with the NHS to identify and share best practice in the provision of IVF. Infertility Network UK is visiting a selection of primary care trusts, which have a range of types of provision, to explore the differences and to ensure that good practice is identified and shared. The visits are in progress. Meetings with about 12 PCTs have either taken place or are in hand, and more will be arranged.
	Recognising the continuing variation in provision—my hon. Friend touched on that—we have extended the project's remit. In July, I announced that the NHS, with Infertility Network UK, will develop social access criteria to help PCTs to develop a standardised approach across the county for providing couples with NHS treatment. We have also announced that we will monitor IVF provision to help identify where further work is required to assist PCTs in assessing the needs of fertility patients and to deliver services in an equitable way. Many of the points that my hon. Friend touched on will be dealt with.
	Monitoring has begun to examine what is happening in the different PCTs. A survey carried out through strategic health authorities asked questions about the level of IVF provision, expenditure and local access criteria. So far, the response rate has been 90 per cent.—we are chasing up the remainder. We shall consider the best way of achieving long-term IVF monitoring on many of the issues that have been identified and on IVF's availability.
	The replies to the survey unfortunately show continued variation from PCT to PCT, and that is frustrating for patients. That goes to the heart of the point that my hon. Friend raised about access to accurate and standardised information about the treatments. However, the vast majority of the PCTs are providing at least one cycle of IVF, although some are not transferring any embryos that have been frozen and stored. I wrote to PCTs about that when I came to office in the summer.
	The survey currently shows that some 30 PCTs provide two or more cycles of IVF, and we will verify that as soon as we can. We are setting up an expert group to advise on the work, with the NHS and the Infertility Network UK. That may not go as far as my hon. Friend suggests, but it offers a good starting point. I have written to the Chairman of the Health Committee to tell him and the Committee members of our intentions. The group will have a broad remit to identify the barriers to full implementation of the NICE fertility guidance and to provide advice, support and information to overcome those barriers. There are other issues that we may need to reflect on following this debate.
	As well as the discussion of NHS infertility provision in the other place, the Human Fertilisation and Embryology Authority has called for a professionally led national strategy to reduce multiple births that occur following fertility treatment and that contribute to a significant number of premature and low-weight babies. As the expert group looks at the range of issues relating to NHS IVF and provides advice, I will ask it to advise on that issue specifically, and it will have much to consider, as this brief debate indicates.
	I hope that I have been able to give some indication to my hon. Friend of the progress that we are trying to make in this important area on many of the topics that he has raised in the House this evening. I welcome his thoughtful comments in today's debate and thank him for his contribution. I assure him that in taking forward the proposals that I have outlined to the House I will reflect again on the points that he has made. As he rightly says, when the Human Fertilisation and Embryology Bill comes before the House it will offer a further opportunity to explore these matters.
	 Question put and agreed to.
	 Adjourned accordingly at twenty-two minutes past Eight o'clock.